Management Information Systems,
Sixth Edition
Chapter 1
Business Information Systems:
An Overview
Objectives
• Explain why information technology matters
• Define digital information and explain why digital
systems are so powerful and useful
• Explain why information systems are essential to
business
• Describe how computers process data into
useful information for problem solving and
decision making
• Identify the functions of different types of
information systems in business
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2
Objectives (continued)
• Describe careers in information technology
• Identify major ethical and societal concerns
created by widespread use of information
technology
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3
Does Information Technology Matter?
• Hackett Group study: “Does IT Matter? Hackett
Concludes the Answer is Yes”
– World’s best performing companies spent 7%
more per employee on IT than typical companies
– They recouped the investment fivefold in lower
operational costs
• Today’s business professionals must know how
to develop and use IT
Management Information Systems, Sixth Edition
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The Power of Digital Systems
• Binary counting system uses only two digits:
0 and 1
• Digital systems:
– Computers and devices that use the binary
system
– Can represent any information as a combination
of zeros and ones
• Information can be represented, stored,
communicated, and processed digitally
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The Power of Digital Systems
(continued)
• Digital information is stored and communicated
by means of electromagnetic signals in three
ways:
– Using Electricity (e.g. RAM)
– Using Magnetism (e.g. Hard Disk)
– Using Light (e.g. CD/DVD)
• Why Digital Information?
– Extremely fast
– Digital copy is an exact copy of the original
• Accuracy and speed make digital systems
powerful, useful, and important
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The Purpose of Information Systems
• Businesses use information systems
– To make sound decisions
– To solve problems
• Problem: any undesirable situation
• Decision: arises when more than one solution to
problem exists (e.g. improve sales, increase
enrollment)
• Both problem solving and decision making
require information
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The Purpose of Information Systems
(continued)
• Keys to success in business:
– Gathering correct information efficiently
– Storing information
– Using information
• Purpose of information systems is to support
these activities
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8
Data, Information,
and Information Systems
• “Data,” “information,” and “system” are
commonly used terms
• Important to understand their similarities and
differences
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9
Data vs. Information
• Data: a given or fact
– Can be number, statement, or picture
– Is the raw material in the production of
information
• Information: facts or conclusions that have
meaning within context
– Composed of data that has been manipulated
(e.g. summarized, computation, statistical
analysis)
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Data Manipulation
• Data is manipulated to make useful information
– New information can be generated from data,
such as averages, trends, etc.
• Survey is common method of collecting data
• Raw data is hard to read
• Information is more useful to business than data
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11
Data vs. Information
• Data: 2455, 2758, 2699, 2913, 2744
• Information:
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12
Generating Information
• Process: the manipulation of data
– Goal is to produces information
– May produce more data
• A piece of information (output of a process) in
one context may be considered data (input to a
process) in another context
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Generating Information (continued)
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14
Generating Information (continued)
INPUT (Data)
PROCESS
ID #
Name
Status
Credit
Major
22425
More, Greg
Registered
3.0
CIS
24103
Morris, Al
Dropped
3.0
CIS
13215
Nur, Josh
Registered
3.0
EDU
12345
Smith, John
Registered
3.0
CIS
Management Information Systems, Sixth Edition
OUTPUT
(Information)
15
Generating Information (continued)
Student List considered Information by Instructors
ID #
Name
Status
Credit
Major
22425
More, Greg
Registered
3.0
CIS
24103
Morris, Al
Dropped
3.0
CIS
13215
Nur, Josh
Registered
3.0
EDU
12345
Smith, John
Registered
3.0
CIS
But the higher management like IRPO, VPIA and the
President himself considers above as Data not
Information.
So, for something to be information depends on
context or who uses the information/data.
Management Information Systems, Sixth Edition
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Information in Context
• Not all information is useful
• To be useful, information must be:
– Relevant
– Complete
– Accurate
• In business, information must also be:
– Current
– Obtained in a cost-effective manner
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Information in Context (continued)
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18
Activity No. 2
• On Gardener+ case study on Pages 1-3, help Amanda
who is tasked to developed the Information System to
identify what are the possible data to be gathered from
customers. And then what possible information could be
generated out of the gathered data via the system that
she is going to develop. (20 pts)
• On the Information generated by the system identified
above give an example of at least one characteristic that
would qualify it as real information. (see Page 11). (10
points)
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What Is a System?
• System: array of components that work together
to achieve goal or goals
Simplified Enrollment System for COM
Pay Student Tuition Bill
Financial Aid
Business Office
Check Financial Status
Bill Students
Admission
Admit Students
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What Is a System?
• A System
– Accepts input
– Processes input
– Produces output
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What is a System? (continued)
•
•
•
•
System may have multiple goals
System may contain subsystems
Subsystem: component of a larger system
Subsystems have subgoals that contribute to
main goal
• Subsystems can receive input from and transfer
output to other subsystems
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What is a System? (continued)
Financial Aid
MITC
Goal : Provide Financial Aid
to Students
Goal : Provide books
and other resources like
multi-media to enhance
student learning
COM Goal : Provide quality adult education
Admission
Goal : Admit qualified students
to the college and keep student
academic records
Maintenance
Goal : Maintain properties
including classrooms as a
viable environment for student
learning
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What is a System? (continued)
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What is a System? (continued)
• Closed system: has no connections with other
systems
• Open system: interfaces and interacts with
other systems
– Often a subsystem of a bigger system
– Subsystems by definition are always open
• Information system (IS): components that work
together to process data and produce
information
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Information and Managers
• Systems thinking: thinking of an organization in
terms of subsystems
– Powerful management approach that creates a
framework for problem solving and decision
making
– Helps keep managers focused on overall goals
• Database: collection of electronic records
• Information systems automate exchange of
information among subsystems
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Without Systems Thinking
Sales Department
Create a website for
Online Customer Orders
to automate manual system
Manufacturing could not
keep up the Demand
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With Systems Thinking
Sales Department
Shared
Database
Create a website for
Online Customer Orders
to automate manual system
Manufacturing could use
Order records for planning
laborers and inventory
Management Information Systems, Sixth Edition
Shipping Dept
use record
to expedite
Shipping and
Packaging
28
Information and Managers (continued)
• Information map: description of data and
information flow within an organization
– Shows a network of information subsystems that
exchange information with each other and with
the outside world
• Information technology: technologies that
facilitate construction and maintenance of
information systems
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The Benefits of
Human-Computer Synergy
• Humans are relatively slow and make mistakes
• Computers cannot make decisions unless
programmed to do so
• Synergy: combining resources to produce
output that exceeds the sum of outputs of the
separate resources by themselves
• Human-computer combination allows human
thought to be translated into efficient processing
of data
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The Benefits of
Human-Computer Synergy (continued)
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31
Information Systems in Organizations
• Information system consists of data, hardware,
software, telecommunications, people, and
procedures
• Computer-based Information system: system
with one or more computers at center
• Organizations lag behind and lose
competitiveness if they do not use information
systems
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32
Information Systems in Organizations
(continued)
• Trends that have made information systems
important in business:
– Growing power and decreasing cost of computers
– Growing capacity and decreasing costs of data
storage devices
– Increasing variety and ingenuity of computer
programs
– Available, reliable, affordable, and fast
communications links to the Internet
– Growth of the Internet
– Increasing computer literacy of the workforce
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Information Systems in Organizations
(continued)
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Information Systems in Organizations
(IS Components View)
Data
Procedures
Hardware
People
Software
Telecommunications
Information Systems
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Information Systems in Organizations
(Organizational View – another way of viewing IS)
People
Information
Systems
Business
Processes
Organization
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The Four Stages of Processing
• Input: collect and introduce data to system
– Transaction: a business event, usually entered
as input (e.g. deposit or withdraw in a bank)
– Transaction processing system (TPS): a
system that records transactions
– Input devices include keyboards, bar code
readers, voice recognition systems, touch
screens
• Data processing: perform calculations on input
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The Four Stages of Processing
(continued)
• Output: what is produced by the information
system
– Output devices include printers and speakers
• Storage: maintaining vast amounts of data
– Storage devices include optical discs
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The Four Stages of Processing (Model
View)
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39
Computer Equipment
for Information Systems
• Different technologies are used to support the
four data processing functions:
–
–
–
–
–
Input devices: receive input
Computers: process data
Output devices: display information
Storage devices: store data
Network devices: transfer data
• Telecommunications: communication that
takes place between computers over great
distances
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Computer Equipment
for Information Systems (continued)
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41
From Recording Transactions to
Providing Expertise:
Types of Information Systems
• Different types of information systems serve
different functions
• Capabilities of applications have been combined
and merged
• Management Information System: a system
that supports planning, control, and making
decisions.
• It is normally used to produce reports for
managers to make routine-decisions (e.g. Daily
Sales Report).
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42
Transaction Processing Systems
• Transaction processing system (TPS): most
widely used type of system
– Records data collected at point where
organization transacts business with other parties
• Point-of-sale machines: record sales
– Include cash registers, ATMs, and purchase
order systems
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43
Transaction Processing Systems
ATM
POS (Point-Of-Sale)
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Supply Chain Management Systems
• Supply chain: sequence of activities involved in
producing and selling products or services
– For products, activities include marketing,
purchasing raw materials, manufacturing and
assembly, packing and shipping, billing, collection,
and after-sale services
– For services, activities include marketing,
document management, and monitoring customer
portfolios
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Supply Chain Management Systems
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46
Supply Chain Management Systems
(continued)
• Supply chain management (SCM) systems:
systems that support these activities
• Also known as enterprise resource planning
systems
• SCM systems eliminate the need to reenter data
that was captured elsewhere in the organization
• An SCM is an enterprise application
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47
Customer Relationship
Management Systems
• Customer relationship management (CRM)
systems: systems for managing relations with
customers
– Used in combination with telephones to provide
customer service
– Often linked to Web applications that track online
transactions
• Retaining loyal customers is less expensive than
acquiring new ones
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48
Business Intelligence Systems
• Business intelligence (BI) systems: systems
that glean relationships and trends from raw
data to help organization compete
– Often contain statistical models
– Access large pools of data
• Data warehouse: large database that usually
store transactional records
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Decision Support and Expert Systems
• Decision support system (DSS): supports
decision making
– Relies on models to produce tables
– Extrapolates data to predict outcomes
– Helps answer “What if?” questions
• Expert system (ES): supports knowledgeintensive decision making
– Uses artificial intelligence techniques
– Can preserve the knowledge of retiring experts
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Geographic Information Systems
• Geographic information system (GIS): ties
data to physical locations
• Represents data on a map in different formats
• May reflect demographic information in addition
to geographic information
• May use information from global positioning
system (GPS) satellites
– Examples: Google Earth, Mapquest
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Geographic Information Systems
(continued)
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52
Exercise No. 2 – Group Reporting
• The links below are for Information Systems type of software:
A.
B.
C.
D.
E.
F.
G.
www.sugarcrm.com
www.openerp.com
www.zumo.org
www.espocrm.com
www.gnucash.org
www.suitecrm.com
www.unicentapos.co.uk
• Group yourselves into 2 or 3 and report the following
– Install the software assign to you to your own computer/laptop
– Give an introduction on what does your assign software do and what
kind of Information System.
– Demo how to use your assigned information systems
• Total of 50 points = Individual Reporting (25pts) + Group Teamwork
(25pts)
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Information Systems
in Business Functions
• Functional business area: services within a
company that support main business
– Includes accounting, finance, marketing, and
human resources
– Part of a larger enterprise system
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Accounting
• Accounting information systems:
–
–
–
–
–
Help record transactions
Produce periodic statements
Create required reports for law
Create supplemental reports for managers
Contain controls to guarantee adherence to
standards
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Finance
• Finance systems:
– Facilitate financial planning and business
transactions
• Tasks include organizing budgets, managing
cash flow, analyzing investments, and making
decisions
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Marketing
• Marketing’s purpose is to pinpoint likely
customers and promote products
• Marketing information systems:
– Analyze demand for products in regions and
demographic groups
– Identify trends in demand for products/services
– Help analyze how advertising campaigns affect
profit
• Web provides opportunity to collect marketing
data as well as promote products and services
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Human Resources
• Human resource management systems aid
record-keeping
– Must keep accurate records
– Aids recruiting, selection, placement, benefits
analysis, requirement projections
• Performance evaluation systems provide
grading utilities
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Web-Empowered Enterprises
• E-commerce: buying and selling goods and
services through Internet
• Internet is a vast network of computers
connected globally
• Web has a profound impact on information
systems
– An emerging advertising medium
– A place to conduct e-commerce
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Careers in Information Systems
• Information technology professionals are
increasingly in demand
• Network administrator, system administrator,
system analyst, software engineering, data
communications analyst, and database
administrator jobs are increasing in demand
Management Information Systems, Sixth Edition
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Help Desk Technician
• Help desk technician:
– Supports end users in their daily use of IT
– Often provides help via telephone
– May use software that gives them control of the
user’s PC
– May need to have knowledge of a wide variety of
PC applications
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Systems Analyst
• Systems analyst:
– Researches, plans, and recommends software
and systems choices
– Responsible for developing cost analyses, design
considerations, implementation timelines, and
feasibility studies
• Involves analyzing system requirements,
documenting development efforts, and providing
specifications for programmers
• Requires communication and presentation skills
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Database Administrator
• Database administrator (DBA): responsible for
databases and data warehouses
– Develops and acquires database applications
– Must adhere to federal, state, and corporate
regulations to protect privacy of customers and
employees
– Responsible for securing the database
Management Information Systems, Sixth Edition
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Network Administrator
• Network administrator: acquires, implements,
manages, maintains, and troubleshoots
networks
• Implements security
– Firewalls
– Access codes
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System Administrator
• System administrator: manages an
organization’s computer operating systems
– Must ensure that operating systems work
together, support business requirements, and
function properly
– Responsible for backup and recovery, adding and
deleting user accounts, performing system
upgrades
Management Information Systems, Sixth Edition
65
Webmaster
• Webmaster: creates and maintains Web site
– Must be familiar with Web transaction software,
payment-processing software, security software
– Manages both the intranet and extranet
• Demand for Webmasters grows as more
businesses use Web
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66
Chief Security Officer
• Chief security officer (CSO): supervises
security of information system
• Position exists due to growing threat to
information security
• Usually reports to chief information officer (CIO)
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67
Chief Information Officer and
Chief Technology Officer
• Chief information officer (CIO): responsible for
all aspects of information system
– Often a corporate vice president
– Must have technical understanding of information
technologies as well as business knowledge
• Chief technology officer (CTO): has similar
duties as CIO
Management Information Systems, Sixth Edition
68
Chief Information Officer and
Chief Technology Officer (continued)
Management Information Systems, Sixth Edition
69
Exercise No. 3 – TEAM Activity
•
•
•
Form a team with two other students. And each team member should play a
role of any the following positions here in College of Micronesia:
– VP for Instructional Affairs (VPIA)
– HR Director
– IT Director
– Comptroller or Chief Finance Officer (CFO)
– OAR Director
– MITC Director
– Financial Aid Director
– Division’s Chairperson
Each student role-player should enumerate information he or she needs to
perform his functions. Now list information that two or more functions must
share (e.g. List of salary rate of all employees is used by HR Director as
well as by the CFO for payroll) and the data produced by one function that
another function uses (e.g. Total number of enrollees each semester
produced by OAR director is useful to VPIA)
Criteria: Individual Participation: 20pts and Group Output : 20pts
Management Information Systems, Sixth Edition
70
Summary
• Computer-based information systems pervade
almost every aspect of our lives
• A system is a set of components that work
together to achieve a common goal
• Subsystem: a system performs a limited task
that produces an end result, which must be
combined with other products from other
systems to reach an ultimate goal
• Data processing has four stages
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71
Summary (continued)
• Any IS that helps in management is a
management information system (MIS)
• Many different types of MIS
• Enterprise application systems (SCM or ERP) tie
together different functional areas of a business
• ISs are used in many business functions,
including accounting, finance, marketing, and
human resources
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72
Summary (continued)
• The job prospects for IT professionals are bright
• IT has created societal concerns regarding
privacy, identity theft, spam, and Web
annoyances
Management Information Systems, Sixth Edition
73