Chapter 1
Business Information Systems in Your Career
Student Objectives
1.
2.
3.
4.
5.
How are information systems transforming business and what is their relationship to
globalization?
Why are information systems so essential for running and managing a business today?
What exactly is an information system? How does it work? What are its people,
organization, and technology components?
How will a four-step method for business problem solving help you solve information
system-relations problems?
How will information systems affect business careers and what information systems
skills and knowledge are essential?
Chapter Outline
1.1
1.2
1.3
1.4
1.5
The Role of Information Systems in Business Today
How Information Systems Are Transforming Business
Globalization Challenges and Opportunities: A Flattened World
Business Drivers of Information Systems
Perspectives on Information Systems and Information Technology
What Is an Information System?
It Isn’t Simply Technology: The Role of People and Organizations
Dimensions of Information Systems
Understanding Information Systems: A Business Problem-Solving Approach
The Problem-Solving Approach
A Model of the Problem-Solving Process
The Role of Critical Thinking in Problem Solving
The Connection Between Business Objectives, Problems, and Solutions
Information Systems and Your Career
How Information Systems Will Affect Business Careers
Information Systems and Your Career: Wrap-Up
How This Book Prepares You for the Future
Hands-On MIS
Key Terms
The following alphabetical list identifies the key terms discussed in this chapter. The page
number for each key term is provided.
Business model, 8
Business processes, 14
Change management, 20
Computer hardware, 15
Computer literacy, 13
Computer software, 15
Critical thinking, 21
Culture, 14
Data, 11
Data management technology, 15
Extranets, 15
Feedback, 12
Information, 11
Information system, 11
Information systems literacy, 13
Information technology (IT), 10
Information technology (IT) infrastructure, 15
Input, 11
Internet, 15
Intranets, 15
Management information systems (MIS), 13
Network, 15
Networking and telecommunications technology, 15
Output, 11
Processing, 11
World Wide Web, 15
Teaching Suggestions
You are probably meeting on the first class session to introduce yourself, the course, and to meet
the students. It is good to get to the classroom early and meet the students as they come in.
Learn a few names as the students enter.
After going over any requirements you may have for the course, try to give an overview of the
course stressing that this is not a technical course. You can usually not do enough to put nontechnical types at ease.
The opening case, NBA Teams Make a Slam-dunk with Information Technology, shows students
that even the professional sports industry has embraced technology as a way to enhance their
employees’ performance and increase their competitive advantage. Students will start to become
familiar with the idea that many different kinds of businesses have had to change the way they
operate, even the National Basketball Association (NBA). Their new emphasis is on using the
Internet and information technology to mine statistical data and turn it into useful information.
The challenges facing the NBA show why information systems are so essential today. The NBA
is a business as well as a sport, and it needs to help its member teams stay in business and
increase their revenues.
Section 1.1, “The Role of Information Systems in Business Today”, gives students a feel for the
importance of information systems in business today and how they have transformed businesses
on the world stage. A good discussion of the six important business objectives outlined in this
section allows the instructor and students to openly discuss why businesses have become so
dependent on information systems today and the importance of these systems for the survival of
a firm. Stress to students that information systems are not a luxury. In most businesses they are
the core to survival. This would be a good time to ask students to discuss how their own schools
are using information systems to enhance their product offering.
Globalization is affecting virtually every country in the world. The most striking evidence of
this trend is the increasing presence of cell phones in the very small villages of Africa. As
technology becomes more pervasive and, in some cases, easier, globalization will continue its
steady march. China, Singapore, and Russia are good examples of how globalization has
flattened the world since they are leading exporters to other countries, especially ones as
industrialized and advanced as the U.S. and many European countries. Emerging countries, like
Poland, the Ukraine, and Ireland, are excellent examples of increasing globalization.
Section 1.2, “Perspectives on Information Systems and Information Technology”, gives
students the facts and definitions that underpin information systems and allow students to
knowledgeably discuss information systems. Students do not need the knowledge of a technical
person, but they do need enough knowledge and definitions to understand the role of information
technology and how it must support the organization’s business strategy. They must also
understand how information technology can be used to help transform the business. Note that
the chapter’s definitions and terms help prepare students to discuss information systems as they
are a part of business systems. Students should be made aware of the formal descriptions of
computer-based information systems (CBIS), the functional classification of the organization,
and standard operating procedures. Encourage students to see that technology is subordinate to
the organization and its purposes.
After contrasting the technical and behavioral approaches, you should stress to your students that
the sociotechnical approach does not ignore the technical, but considers it as a part of the
organization. This is also a good place to reinforce the differences between information systems
literacy and computer literacy. When asked to describe company information systems, students
often describe the information systems in terms of technology. It is important to stress to
students that information systems are more than just technology, and that they have people,
organization, and technology dimensions. Figure 1-3 and the diagram at the beginning of the
chapter (page 5) can be used to illustrate this point.
Interactive Session: Technology: UPS Competes Globally with Information Technology
Case Study Questions
1. What are the inputs, processing, and outputs of UPS’s package tracking system?
Inputs: The inputs include package information, customer signature, pickup, delivery, time-card
data, current location (while en route), and billing and customer clearance documentation.
Processing: The data are transmitted to a central computer and stored for retrieval. Data are also
reorganized so that they can be tracked by customer account, date, driver, and other criteria.
Outputs: The outputs include pickup and delivery times, location while en route, and package
recipient. The outputs also include various reports, such as all packages for a specific account or
a specific driver or route, as well as summary reports for management.
2. What technologies are used by UPS? How are these technologies related to UPS’s
business model and business objectives?
Technologies include handheld computers (DIADs), barcode scanning systems, wired and
wireless communications networks, desktop computers, UPS’s central computer (large
mainframe computers), and storage technology for the package delivery data.
Telecommunications for transmitting data, pagers, cellular phone networks, and many different
pieces of UPS in-house package tracing software for tracking packages, calculating fees,
maintaining customer accounts and managing logistics, as well as software to access the World
Wide Web.
UPS has used the same strategy for over 90 years. Its strategy is to provide the “best service and
lowest rates.” One of the most visible aspects of technology is the customer’s ability to track
his/her package via the UPS Web site. However, technology also enables data to seamlessly flow
throughout UPS and helps streamline the workflow at UPS. Thus, the technology described in
the scenario enables UPS to be more competitive, efficient, and profitable. The result is an
information system solution to the business challenge of providing a high level service with low
prices in the face of mounting competition.
3. What would happen if these technologies were not available?
Arguably, UPS might not be able to compete effectively without technology. If the technology
were not available, then UPS would, as it has through most of its history, attempt to provide that
information to its customers, but at higher prices. From the customers’ perspective, these
technologies provide value because they help customers complete their tasks more efficiently.
Customers view UPS’s technology as value-added services as opposed to increasing the cost of
sending packages.
MIS In Action
Explore the UPS Web site (www.ups.com) and answer the following questions:
1. What kind of information and services does the Web site provide for individuals, small
businesses, and large businesses? List these services and write several paragraphs
describing one of them, such as UPS Trade Direct or Automated Shipment Processing.
Explain how you or your business would benefit from the service.
Answers will vary by the type of service students select. It’s important that they incorporate
principles from this chapter in their answers. Make sure they organize their answers according to
how the technology focuses on people, technology, and organizations. Many of the questions in
the remaining chapters will ask for that kind of organization.
2. Explain how the Web site helps UPS achieve some or all of the strategic business
objectives we described earlier in this chapter. What would be the impact on UPS’s
businesses this Web site were not available.
UPS invests heavily in information systems technology to make its business more efficient and
customer oriented. It uses an array of information technologies including barcode scanning
systems, wireless networks, large mainframe computers, handheld computers, the Internet, and
many different pieces of software for tracking packages, calculating fees, maintaining customer
accounts, and managing logistics. You may want to highlight how UPS has had to change and
adapt to new technologies to remain competitive.
Section 1.3, “Understanding Information Systems: A Business Problem-Solving Approach”.
Many students do not immediately recognize that the problem-solving model illustrated in this
chapter was taken from the old scientific problem-solving model that has been around for years.
Ask students to use this model and apply it to their decision-making processes that they
unconsciously go through when they first awake in the morning. For a warm up to this model
ask students to use Figure 1-4 and apply it to processes required when they are assigned a school
project or case study. What is important to stress is that the process is continuous. There is no
direct path from one process to the next and that most problem-solving processes require you to
circle back to a previous step in order to reevaluate the situation.
Interactive Session: People: How Can Saks Know Its Customers:
Case Study Questions
1. What is the problem affecting the performance of Saks?
The Interactive Session: People provides an example of an outstanding manager who knows how
to use information technology wisely. Stephen Sadove, the new CEO at Saks, realized the
answer to Saks’ problems was not to open more stores but to increase profits at the existing
facilities.
Saks’ suffers from a lack of inventory and misguided inventory that didn’t appeal to local
customers. These problems can be directly attributed to a lack of information about customer
buying preferences, customer demographics, individualized store performance, and supply chain
management.
2. What information does Saks need to solve this problem? What other pieces of data does
Saks need in addition to those in its 9-box grid?
The nine-box grid developed by Sadove and his team was a good start to understanding which
items sold best in each individual location. The grid helped them categorize the styles and prices
of their inventory so they could better understand how each item fit into each store. The grid
provided a tool for the team to customize each store’s inventory and ensure appropriate stock
levels were maintained.
Sadove and his team also need demographic data regarding each store’s typical customers. It’s
best to obtain this type of information from external sources such as the Census Bureau and local
government databases. That ensures the data isn’t skewed to company biases. Other data that
would be helpful to Saks includes supply chain information such as back-orders, shipping times,
and shipping costs. The data could provide corporate decision-makers with information they
need to reduce costs, ensure inventories are available at each store, and increase sales and profits.
3. Where can Saks acquire this information?
The data for Saks’ nine-box grid obviously would come from internal sources such as store sales,
inventory management systems, back-order requests, and customer surveys. These data can be
obtained from point-of-sale technologies implemented in each store. Since Saks’ Web site is the
second largest source of revenue, it could provide intricate levels of detail about customer
behavior without being intrusive. The company could also use the Web site to offer customer
satisfaction surveys that would be much easier to process with truer answers than perhaps instore surveys.
External data can be obtained from the U.S. government’s Census Bureau and local government
databases. Information about back-orders and shipping costs and times can be obtained from
supply chain information systems or from the company’s supply partners. For example, UPS
could provide Saks with data about all its shipments to individual stores over the last year. Saks
could pair the data with its own sales data to determine which items sold quickly and which ones
didn’t.
4. What role should managers and employees have in designing the solution?
Each store manager should be allowed to provide input into a solution that best fits each store
locale and the overall company. Purportedly, local managers know their customers best.
Therefore, they should be given an opportunity to customize inventories and marketing
campaigns for their customers. It’s obvious that a one-size-fits-all strategy has not worked for
Saks in the past. Employees could also be included in designing inventories and marketing
strategies that appeal to those they interface with everyday.
5. Design a report that represents the information Saks needs to implement its
merchandising strategy.
Appropriate customer-related data elements include customer age, marital status, income levels,
type of career field, and geographical area of employment. Appropriate inventory-related data
elements include styles, prices, date received, date sold, shipping costs, and whether the item
sold at full price or reduced price. Using Excel or Access, the data can be manipulated for one
store only, a region, or all stores.
6. How might a better understanding of customer preferences support Saks’ strategy of
improving existing facilities?
Using customer survey data, Saks can design in-store displays that target its largest customer
demographic. Carrying appropriate inventory for each store’s targeted customer base frees up
sales floor space for items most desired by the largest demographic group rather than trying to
carry inventory that is spread out over every customer group. Storage facilities could be
maximized to ensure only those items that will sell quickly in the local store are kept on hand.
Doing so will minimize costs and increase profits.
MIS In Action
1. Explore the Saks Fifth Avenue Web site (www.saks.com). What are some of the
features of the Web site that make it useful for selling luxury goods?
Answers will vary by student. They should focus on how easy the site is to navigate, how easy it
is to place orders and use the online payment system. Ask students to focus on how well Sak’s
presents its products compared to online retailers that focus on lower-priced, non-luxury items.
Is Sak’s presentation worthy of the price of the goods? How well does the site fulfill its
customer service responsibilities?
2. What information about customers can be collected at the Web site that would help
Saks stock the items that customers want?
Encourage students to explore the Web site’s privacy policy to determine the kinds of
information that are collected and what Sak’s does with it. Ask students what kinds of
information they don’t want Web sites to collect about them.
Section 1.4, “Information Systems and Your Career”. As an exercise, instructors may wish to
have their students surf the Internet for job opportunities at Monster Job (www.monster.com) or
another employment application site. Divide your class into groups to represent the major
functional areas such as finance, accounting, marketing, human resource management,
production and operations, information systems, and others. Ask each group to find five jobs
being advertised in each of the functional areas. Have them list the required qualifications being
requested as they relate to the field of information systems.
Since your students should have access to e-mail, you may want to send them an “MIS Word of
the Day.” Check out http://www.whatis.com, http://whatis.techtarget.com or one of the many
other online computer terminology dictionaries to locate words and definitions that supplement
the Laudon text. Students often enjoy the electronic interactions with their instructor, and the
words are yet another way to reinforce learning.
Section 1.5, “Hands-On MIS” This section gives students an opportunity to analyze real world
information systems needs and requirements. It provides several exercises you can use to
determine if students are grasping the material in the chapter.
Understanding Information System Requirements: Preparing a Management Overview of
the Company: Dirt Bikes USA
Software skills: Presentation software
Business skills: Management analysis and information system recommendations
1. What are the company’s goals and culture?
Dirt Bikes appears to have a very democratic, employee-friendly culture, emphasizing ongoing
learning, quality, attention to detail, and employee contributions.
2. What products and services does Dirt Bikes U.S.A. provide? How many types of
products and services are available to customers? How does Dirt Bikes sell its
products?
Dirt Bikes specializes in off-road and motocross motorcycles that emphasize racing performance,
styling, and best quality parts sourced from all over the world. It is a small company producing
only four models. Dirt Bikes sells through a network of authorized dealers. Its sales department
is responsible for working with these distributors and finding ways to promote Dirt Bikes.
3. How many employees are managers, production workers, or knowledge or information
workers? Are there levels of management?
The company is very small and not very hierarchical. Most of the employees are in production.
Many of its departments have less than ten people. Production is probably the only department
that warrants more than one manager. One might expect to see separate managers for Service,
Shipping and Receiving, Parts, and Design and Engineering and perhaps several additional
managers for Manufacturing.
4. What kinds of information systems and technologies would be the most important for a
company such as Dirt Bikes?
One would expect to see information systems supporting manufacturing and production and sales
and marketing being the most important for this company. Such systems would help the
company monitor work on the assembly line, obtain parts from suppliers, monitor orders from
distributors, and provide parts and servicing information. A company Web site to publicize the
unique features of this brand and its connection to motorcycle racing events would also be very
valuable.
5. (Optional) Use electronic presentation software to summarize your analysis for
management.
Improving Decision Making: Using Databases to Analyze Sales Trends:
Software skills: Database querying and reporting
Business Skills: Sales Trend Analysis
This exercise helps students understand how a raw file of sales transactions can be analyzed
using database software to produce valuable information for managers. The solutions provided
here were created using the query wizard and report wizard capabilities of Microsoft Access.
Students can, of course, create more sophisticated reports if they wish, but much valuable
information can be obtained from simple query and reporting functions. The main challenge is to
get students to ask the right questions about the information.
 Which products should be restocked?
 Which stores and sales regions would benefit from a promotional campaign and
additional marketing?
 When (what time of year) should products be offered at full price, and when should
discounts be used?
The answers to the questions can be found in the Microsoft Access File named:
MIS8ch01_solutionfile.mdb
Improving Decision Making: Using the Internet to Locate Jobs Requiring Information
Systems Knowledge
Software skills: Internet-based software
Business skills: Job searching
In addition to having students research jobs in their chosen career field, it may be quite
interesting to have them research jobs in other career fields so they can see that virtually every
job and/or career requires information systems skills.
Review Questions
1. How are information systems transforming business and what is their relationship to
globalization?
Describe how information systems have changed the way businesses operate and their
products and services.
Wireless communications, including computers, cell phones, and PDAs, are keeping
managers, employees, customers, suppliers, and business partners connected in every way
possible. Email, online conferencing, the Web, and the Internet, are providing new and
diverse lines of communication for all businesses, large and small. Through increased
communication channels and decreased costs of the communications, customers are
demanding more of businesses in terms of service and product, at lower costs. E-commerce is
changing the way businesses must attract and respond to customers.
Describe the challenges and opportunities of globalization in a “flattened” world.
Customers no longer need to rely on local businesses for products and services. They can
shop 24/7 for virtually anything and have it delivered to their door or desktop. Companies
can operate 24/7 from any geographic location around the world. Jobs can just as easily move
across the state or across the ocean. Employees must continually develop high-level skills
through education and on-the-job experience that cannot be outsourced. Business must avoid
markets for goods and serves that can be produced offshore much cheaper. The emergence of
the Internet into a full-blown international communications system has drastically reduced
the costs of operating and transacting on a global scale.
2. Why are information systems so essential for running and managing a business today?
List and describe six reasons why information systems are so important for business
today.
Six reasons why information systems are so important for business today include:
(1) Operational excellence
(2) New products, services, and business models
(3) Customer and supplier intimacy
(4) Improved decision making
(5) Competitive advantage
(6) Survival
Information systems are the foundation for conducting business today. In many industries,
survival and even existence without extensive use of IT is inconceivable, and IT plays a
critical role in increasing productivity. Although information technology has become more
of a commodity, when coupled with complementary changes in organization and
management, it can provide the foundation for new products, services, and ways of
conducting business that provide firms with a strategic advantage.
3. What exactly is an information system? How does it work? What are its people,
organization and technology components?
List and describe the organizational, people, and technology dimensions of information
systems.



Organization: The organization dimension of information systems involves issues
such as the organization’s hierarchy, functional specialties, business processes,
culture, and political interest groups.
People: The people dimension of information systems involves issues such as
training, job attitudes, and management behavior.
Technology: The technology dimension consists of computer hardware, software,
data management technology, and networking/telecommunications technology.
Define an information system and describe the activities it performs
The textbook defines an information system as a set of interrelated components that work
together to collect, process, store, and disseminate information to support decision making,
coordination, control, analysis, and visualization in an organization. In addition to supporting
decision making, information systems may also help managers and workers analyze
problems, visualize complex subjects, and create new products.
Distinguish between data and information and between information systems literacy
and computer literacy.




Data are streams of raw facts representing events occurring in organizations or the
physical environment before they have been organized and arranged into a form that
people can understand and use.
Information is data that have been shaped into a form that is meaningful and useful to
human beings.
Information systems literacy is a broad-based understanding of information systems.
It includes a behavioral as well as a technical approach to studying information
systems.
In contrast, computer literacy focuses primarily on knowledge of information
technology. It is limited to understanding computers.
Explain how the Internet and the World Wide Web are related to the other technology
components of information systems
The Internet and World Wide Web have had a tremendous impact on the role information
systems play in organizations. The Internet and World Wide Web are responsible for the
increased connectivity and collaboration within and outside the organization. The Internet,
World Wide Web, and other technologies have led to the redesign and reshaping of
organizations. The Internet and World Wide Web have helped transform the organization’s
structure, scope of operations, reporting and control mechanisms, work practices, work
flows, and products and services.
4. How will a four-step method for business problem solving help you solve information
system-related problems?
List and describe each of the four steps for solving business problems.
 Problem identification involves understanding what kind of problem is being
presented – whether it stems from people, organizational, or technology factors or a
combination of these.
 Solution design involves designing several alternative solutions to the problem that
has been identified.
 Solution evaluation and choice entails selecting the best solution, taking into account
its cost and the available resources and skills in the business.
 Implementation entails purchasing or building hardware and software, testing the
software, providing employees with training and documentation, managing change as
the system is introduced into the organization, and measuring the outcome.
Give some examples of people, organizational, and technology problems found in
businesses.
In answering this question students may draw on examples given in Table 1.1 on page 20 of
the text.

Organization: In order to understand how a specific business firm uses information
systems, you need to know something about the structure, history, and culture of the
company. Typical organizational problems include:
 Poor/outdated business processes (usually inherited from the past)
 Unsupportive culture and attitudes
 Political in-fighting
 Turbulent business environment/changes in the organization’s surrounding
environment
 Complexity of task
 Inadequate resources

People: Information systems require skilled people to build and maintain them, and
needs people who can understand how to use the information in a system to achieve
business objectives. Typical people problems include:
 Lack of employee training
 Difficulties of evaluating performance
 Legal and regulatory compliance
 Work environment
 Lack of employee support and participation
 Ergonomics
 Poor or indecisive management

Technology: Information technology is one of many tools managers use to cope with
change. Elements of technology include: computer hardware, computer software,
data management technology, networking and telecommunications technology. Other
technology elements include the Internet, intranets, extranets, the World Wide Web.
Typical technology problems include:
 Insufficient or aging hardware
 Outdated software
 Inadequate database capacity
 Insufficient telecommunications capacity
 Incompatibility of old systems with new technology
 Rapid technological change
What role does critical thinking play in problem solving?
 Critical thinking can be briefly defined as the sustained suspension of judgment with
an awareness of multiple perspectives and alternatives. It involves at least four
elements:
 Maintaining doubt and suspending judgment. By doubting all solutions at first and
refusing to rush to a judgment, you create the necessary mental conditions to take a
fresh, creative look at problems, and you keep open the chance to make a creative
contribution.



Being aware of different perspectives. Recognize that all interesting business
problems have many dimensions and that the same problem can be viewed from
different perspectives. You have to decide which major perspectives are useful for
viewing a given problem.
Testing alternatives or modeling solutions to problems and letting experience be the
guide. Not all contingencies can be known in advance and much can be learned
through experience. Therefore, experiment, gather data, and reassess the problem
periodically.
Being aware of organizational and personal limitations.
What role do information systems play in business problem solving?
Problem solving requires critical thinking in which one suspends judgment to consider
multiple perspectives and alternatives. There are a number of reasons why business firms
invest in information systems and technologies. Six business objectives of information
systems include: operational excellence; new products, services, and business models;
customer/supplier intimacy; improved decision making; strategic advantage; and survival.
When firms cannot achieve these objectives, they become “challenges” or “problems” that
receive attention. Managers and employees who are aware of these challenges often turn to
information systems as one of the solutions or the entire solution.
5. How will information systems affect business careers and what information system
skills and knowledge are essential?
Describe the role of information systems in careers in accounting, finance, marketing,
management, and operations management and explain how careers in information
systems have been affected by new technologies and outsourcing?
Each of the major business fields requires an understanding of information systems.
Accounting: Accountants need to understand future changes in hardware, software, and
network security essential for protecting the integrity of accounting systems along with new
technologies for reporting in online and wireless business environments.
Finance: Financial people need to understand future IT changes, financial database systems,
and online trading systems for managing investments and cash.
Marketing: Marketing personnel require an understanding of marketing database systems
and systems for customer relationship management as well as Web-based systems for online
sales.
Operations management: These individuals need knowledge of changing hardware,
software, and database technologies used in production and services management and an indepth understanding of how enterprise-wide information systems for production
management, supplier management, sales force management, and customer relationship
management achieve efficient operations.
Careers in information systems: The individuals clearly need to understand the central role
databases play in managing information resources of the firm and how new hardware and
software technologies can enhance business performance. They also need skills for leading
the design and implementation of new management systems, working with other business
professionals to ensure systems meet business objectives, and working with software
packages providing new system solutions.
What information system skills and knowledge are essential for all business careers?
Common information systems skills and knowledge for all business careers include an
understanding of how information systems help firms achieve major business objectives; an
appreciation of the central role of databases; skills in information analysis and business
intelligence; sensitivity to the ethical, social, and legal issues raised by systems; and the
ability to work with technology specialists and other business professionals in designing and
building systems.
Discussion Questions
1. What are the implications of globalization when you have to look for a job? What can
you do to prepare yourself for competing in a globalized business environment? How
would knowledge of information systems help you compete?
Many jobs, not just in manufacturing, but in the services industry, are moving across borders
and oceans thanks to advances in communications provided by the Internet and other
networks. Many of these jobs have been in less-skilled information system occupations.
However, the trend is spreading to even more advanced-skilled jobs in the financial, legal,
medical, and accounting industries. Individuals must continually develop high-level skills
through education and on-the-job experience that cannot be outsourced. Individuals must
also develop a broad range of problem-solving skills, as well as technical skills, that make
them more valuable to companies. Information systems and technologies will play a major
and expanding role in day-to-day work and throughout employees’ careers. Career
opportunities and compensation will in part depend on the ability to help business firms use
information systems to achieve their objectives.
2. If you were setting up the Web sites for NBA teams, what people, organization, and
technology issues might you encounter?
Answers will vary, however a good starting point is to use Table 1.1 on page 20 to flush out
some suggestions.
Organization: Typical organizational problems include:
 Outdated/poor business processes (usually inherited from the past)
 Unsupportive culture and attitudes
 Political in-fighting
 Turbulent business environment/changes in the organization’s surrounding


environment
Complexity of task
Inadequate resources
Technology: Typical technology problems include:
 Insufficient or aging hardware
 Outdated software
 Inadequate database capacity
 Insufficient telecommunications capacity
 Incompatibility of old systems with new technology
 Rapid technological change
People: Typical people problems include:
 Lack of employee training
 Difficulties of evaluating performance
 Legal and regulatory compliance
 Work environment
 Poor management
 Ergonomics
 Poor or indecisive management
 Lack of employee support and participation
Video Case Questions
You will find a video case illustrating some of the concepts in this chapter on the Laudon Web
site at www.prenhall.com/laudon along with questions to help you analyze the case.
Teamwork: Analyzing a Business System
In a group with three or four classmates, find a description in a computer or business
magazine of an information system used by an organization. Look for information about
the company on the Web to gain further insight into the company, and prepare a brief
description of the business. Describe the system you have selected in terms of its inputs,
processes, and outputs and in terms of its organization, people, and technology features
and the importance of the system to the company. If possible, use electronic presentation
software to present your analysis to the class.
Answers for this project will vary. The purpose of this project is to visualize and understand the
main components of an information system and to understand the organizational context of an
information system.
For example, if the system is a payroll system, inputs might include employee personal
information (such as name, address, state, dependent names), tax information, special deductions
(such as employee pension plan, medical insurance), pay type (hourly, weekly, salary,
commission), pay period, and hours worked. Processes would include calculating gross pay,
deductions, taxes and net pay, and updating employee information such as deductions. Outputs
include updated employee records, pay stubs and checks (or pay stubs and direct deposit tape),
and perhaps retrieval through an online system. Technology includes the types of computers,
storage mediums, the payroll software used, and the database technology. An organizational
description might include the size and type of staff required to run the system. It might also
include the place of the payroll system within the larger organization (Human Resources
function or Accounting function, for example). Management might include payroll management
problems the system solved or is designed to solve. For example, it may have been installed to
expedite pay, eliminate paper, or solve a government regulatory problem.
Business Problem-Solving Case: Is Second Life Ready for Business?
1. What problems can Second Life help businesses solve?
Second Life provides businesses with tools for online conferencing, online collaboration,
knowledge management, and prototyping. Companies can test new products using Second
Life’s 3-D rendering programs. They can experiment with new marketing and advertising
campaigns to see how people react. They can receive feedback on real-world products or
services.
2. Considering what you have learned about Second Life, how could you, as an individual,
create a modest start-up business on the Grid? What goods would you sell? Why would
this be a good choice of product? What, in simple terms, would your business plan be?
Why would it work?
One potential new business would be to sell furnishings for online spaces. People inherently
want to furnish and decorate their private spaces. The products could be bought and sold
using Lindens. The start-up costs could be low since there aren’t any inventory costs. You
can create the furnishings as they’re ordered. A business plan would include advertising
ideas, marketing ideas, how to deliver the products, customer follow-up ideas, and financial
planning.
3. Visit eBay on the Web and see what Second Life items you can find listed for auction.
How would you rate the activity surrounding these items? Are you surprised by what
you see? Why or why not?
Obviously the information for this question will fluctuate.As of this writing, eBay offered
211 items. They included how-to manuals for making money on Second Life, a guide to
selling land, and business opportunities on the site. One item in particular was a vending
machine business package available for $4.99. The individual offering the item was an eBay
Power Seller with 6,483 feedback postings. He was obviously an established eBay seller.
Other items for sale include a Gym Workout package for $4.99 and a macro that makes
navigating the skies of Second Life easier. It sold for $12.99. Answers to the last three
questions will vary by student. The point is to have them realize how advanced and
pervasive sites like Second Life have become.
4. How important is interoperability between 3-D worlds like Second Life and other Web
sites such as Amazon, MySpace, and YouTube? Do you think that Second Life can
survive and prosper on its own? What is the future of these entities? Separate or
integrated?
Interoperability between 3-D worlds and other Web sites is very important because of the
increasing popularity of all the sites. People don’t want to continually learn new and
different skills. Rather they want to transport their skills and software from one site to
another. It’s doubtful that Second Life could survive and prosper on its own. Demand for the
site will increase if it becomes more entwined with other sites and even real life. As people
continue to combine offline and online activities, they want easy ways to transition from one
to the other. This is where the people component of the three dimensions of information
systems becomes apparent. Obviously this leads to more integration in the future.
5. What obstacles does Second Life have to overcome in order to become a mainstream
business tool? Does it face fewer or more obstacles to become a mainstream educational
tool? To what do you attribute the difference?
Second Life needs to overcome the idea and perception that it’s “just another game site.”
Other obstacles include ease-of-use, interoperability between pre-established business
systems and Second Life’s proprietary system. It needs to create ways to import and export
data between its system and external business systems—don’t require data to be re-input into
either system. Second Life faces more obstacles in trying to become a mainstream
educational tool. Educators are inherently opposed to online, distance education because it
supposedly lacks the face-to-face communication between teachers and students. However,
as more education is carried online, Second Life has all the tools in place to make it easy to
conduct classes, especially its online collaboration tools.
6. What kinds of businesses are most likely to benefit from a presence on Second Life?
Why?
Retail businesses that are already used to doing business online may have an easier time of
establishing a viable presence on Second Life. They are used to advertising and marketing to
customers online and have the systems built for taking orders, accepting payments, and
shipping products. Other companies, like IBM, that have established online collaboration
systems and online knowledge management systems will probably have an easier time using
Second Life as another outlet for these activities.
7. Would you like to interview for a job using Second Life? Why or why not?
Obviously the answers to this question will vary from student to student. Some may prefer
interviewing for a job using Second Life since they may see face-to-face interviews as
extremely nerve-wracking. Other may prefer a face-to-face interview rather than trying to
create an avatar that adequately represents them.
8. Is Second Life a precursor of how business will be conducted in the future or a
corporate experiment? Justify your answer.
Second Life probably is a precursor of how business will be conducted in the future. Online
presence and activity is increasing, not decreasing. Businesses are continually turning to
online services to change the way they do business and move many of their offline activities
to online ventures.
Chapter Summary
Section1.1: The Role of Information Systems in Business Today
Information systems are a foundation for conducting business today. In many industries,
survival and even existence is difficult without extensive use of information technology.
Businesses today use information systems to achieve six major objectives: operational
excellence; new products, services, and business models; customer/supplier intimacy; improved
decision making; competitive advantage; and day-to-day survival.
Section 1.2: Perspective on Information Systems and Information Technology
From a technical perspective, an information system collects, stores, and disseminates
information from an organization’s environment and internal operations to support
organizational functions and decision making, communication, coordination, control, analysis,
and visualization. Information systems transform raw data into useful information through three
basic activities: input, processing, and output. From a business perspective, an information
system provides a solution to a problem or challenge facing a firm and represents a combination
of people, organization, and technology elements. The people dimension of information systems
involves issues such as training, job attitudes, and management behavior. The technology
dimension consists of computer hardware, software, data management technology, and
networking/telecommunication technology. The organization dimension of information systems
involves issues such as the organization’s hierarchy, functional specialties, business processes,
culture, and political interest groups.Information systems literacy requires an understanding of
the organizational and people dimensions of information systems as well as the technical
dimensions addressed by computer literacy. Information systems literacy draws on both
technical and behavioral approaches to studying information systems.
Section 1.3: Understanding Information Systems: A Business Problem-Solving Approach
Business problem solving involves four steps: problem identification, solution design, choice
and implementation. Problem identification involves understanding what kind of problem is
being presented, whether it stems from people, organizational, or technology factors or a
combination of these. Solution design involves designing several alternative solutions to the
problem that has been identified. Choice entails selecting the best solution, taking into account
its cost and the available resources and skills in the business. Implementation of an information
system solution entails purchasing or building hardware and software, testing the software,
providing employees with training and documentation, managing change as the system is
introduced into the organization, and measuring the outcome. Problem solving requires critical
thinking in which one suspends judgment to consider multiple perspectives and alternatives.
Section 1.4: Information Systems and Your Career
Each of the major business fields requires an understanding of information systems.
Accountants need to understand future changes in hardware, software, and network security
essential for protecting the integrity of accounting systems along with new technologies for
reporting in online and wireless business environments. Finance majors need to understand
future IT changes, financial database systems, and online trading systems for managing
investments and cash. Marketing majors require an understanding of marketing database
systems and systems for customer relationship management as well as Web-based systems for
online sales. Operations management careers need knowledge of changing hardware, software,
and database technologies used in production and services management and an in-depth
understanding of how enterprise-wide information systems for production management, supplier
management, sales force management, and customer relationship management achieve efficient
operations. Careers in management and human resources need knowledge of how hardware and
software can make management more efficient, enhance coordination, and achieve major
business objectives.
Information systems majors clearly need to understand the central role databases play in
managing information resources of the firm and how new hardware and software technologies
can enhance business performance. They also need skills for leading the design and
implementation of new management systems, working with other business professionals to
ensure systems meet business objectives, and working with software packages providing new
system solutions.
Common information systems skills and knowledge for all business careers include an
understanding of how information systems helps firms achieve major business objectives; an
appreciation of the central role of databases; skills in information analysis and business
intelligence; sensitivity to the ethical, social, and legal issues raised by systems; and the ability to
work with technology specialists and other business professionals in designing and building
systems.