Chapter 12
Information Systems and System Development
What Is an Information System?



System—a collection of elements and procedures that interact to accomplish a goal.
Information system—a system used to generate information to support users in an
organization.
System development—the process of designing and implementing a new or
modified system.
Who Uses Information Systems?




Executive managers: strategic decisions.
Middle managers: tactical decisions.
Operational managers: decisions related to meeting short-term objectives.
Non-management workers: on-the-job decisions.
Types of Information Systems


Different types of information systems are used by different workers.
Office systems






Office automation—computer-based office-oriented technologies.
Office systems—combinations of hardware, software, and other resources used to
facilitate communications and enhance productivity.
 Document-processing systems
 Communications systems
Transaction processing systems
 Order-entry systems
 Inventory control systems
 Payroll systems
 Accounting systems
Management information systems (MISs)—provide decision-makers with
preselected types of information.
 Generally provide information in the form of computer-generated reports.
 Usually generated from data obtained from transaction processing systems.
 Most frequently used to make moderately structured, middle-management
decisions.
Decision support systems (DSSs)—help managers organize and analyze the
information when making decisions.
 Provide information on demand and incorporate data from both internal and
external sources.
 Are tailored to help with specific types of decisions and are typically used by
middle and upper management.
 A special type of DSS targeted to upper management is called an executive
information system (EIS).
Geographical information systems (GISs)
 Combines geographical information with other types of data to provide a better
understanding of relationships between the data.
 Commonly used to make decisions about locations (e.g. new facility locations,
disaster risk, geographical crime patterns).



Enterprise-wide system—integrates an entire company or enterprise.
Inter-enterprise system—links multiple enterprises, such as a business and its
customers, suppliers, and business partners.
Types of enterprise systems:
 Electronic data interchange (EDI)—transferring data between different
companies using a network.
 Enterprise resource planning (ERP)—ties together all types of a business’s
activities.
 Enterprise application integration (EAI)—exchanges ERP or other internal
system data between different applications and organizations.
 Customer relationship management (CRM)—customer service activities; many
take place online today
via the Web.
 Supply chain management (SCM)—oversees materials, information, and
finances from supplier to the consumer.
 Value chain management
 Just-in-time (JIT) systems
 Product life cycle management (PLM) and price optimization systems.

Design and manufacturing systems
 Computer-aided design (CAD)
 Computer-aided manufacturing (CAM)

Artificial intelligence (AI)
 Turing Test
 Chess programs

Artificial intelligence systems
 Natural language systems—can understand natural languages (e.g.
chatterbots).
 Expert systems—make decisions based on an expert knowledge base and
predetermined rules.
 Neural network systems—connections between processing elements resemble
brain neurons.
 Robotic systems—use robots.
Responsibility for Systems Development

The information systems (IS) department
 Data processing personnel
 Systems analyst
 Programmers
 Operations personnel
 Design group

Outsourcing companies
 Advantages: Cost savings, flexibility
 Disadvantages: Less control, conflicts with in-house personnel
The System Development Life Cycle (SDLC)
Preliminary Investigation



Also called a feasibility study
Purpose: To identify and evaluate the program area to suggest possible courses of
action.
Documentation: Feasibility report
System Analysis




Purpose: To study the problem in depth and determine the needs of the system
users.
Data collection.
Data analysis (data flow diagrams, decision tables, checklists, etc.).
Documentation: Questionnaires etc. used during data collections and diagrams
generated during data analysis.
System Design




Purpose: To develop a model of the new system and perform an analysis of expected
benefits and cost.
System model.
 System flowcharts
 Input/output diagrams
 Data dictionary
Cost/benefit analysis (tangible and intangible benefits).
Documentation: System specifications.
System Acquisition





Purpose: To purchase or develop the hardware and software necessary for the new
system.
The make-or-buy decision.
RFPs and RFQs.
Evaluating bids.
Documentation: RFPs, RFQs, proposals received, and vendor evaluation materials.
System Implementation


Purpose: To install the system and make it operational.
Conversion options:





Direct conversion
Parallel conversion
Phased conversion
Pilot conversion
Documentation: Implementation schedule and test data and results.
System Maintenance




Purpose: To keep the system operational until the next major system redesign.
Post-implementation review.
Updating software and hardware, as needed.
Documentation: Completed project folder.
Approaches to System Development



Traditional approach—standard six phases in that order.
Prototyping—first develop and modify a prototype of the system.
End-user development—system designed and implemented by the end user.
Key Terms
Accounting system
Artificial intelligence system
Benchmark test
Computer-aided design (CAD)
Computer-aided manufacturing
(CAM)
Customer relationship management
(CRM)
Decision support system (DSS)
Electronic data interchange (EDI)
Enterprise application integration
(EAI)
Enterprise resource planning (ERP)
Enterprise-wide system
Expert system
Geographic information system
(GIS)
Information system
Inter-enterprise system
Inventory control system
Just-in-time (JIT) system
Management information system
(MIS)
Natural language system
Neural network
Office automation (OA)
Office system
Order entry system
Payroll system
Preliminary investigation
Prototyping
Robot
Robotics
Supply chain management (SCM)
System acquisition
System analysis
System design
System development
System development life cycle
(SDLC)
System implementation
System maintenance
System
Systems analyst
Traditional system development
Transaction processing system
Value chain management