Chapter 1
Business Information Systems: An
Overview
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What is a problem?
• Problems in business are undesirable situations
• To solve problems, managers must make decisions to
resolve the undesirable situation
• Decisions involve selecting a solution from among
several alternatives.
• Good decisions require information
• Information systems produce information (among
other things)
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Data and Information
• Data are defined as raw facts (dates, monetary
amounts, names, addresses, account numbers, prices,
etc.)
• Information is processed data put into some context.
Contextual elements include things like relevance,
completeness, accuracy, or timeliness).
• A system is a set of components that work together to
produce a common goal (or goals)
• An information system is a set of components whose
goal is to produce information that benefits an
organization
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Components of Information Systems
• Components of an IS include hardware, software, data,
people, and processes (see next slide)
– Examples of each
• Information technology refers to all technologies that
facilitate the construction of IS
• Importance of IS in business due to several trends
– Price performance ratio of information technology
– Variety and ingenuity of computer programs
– Quick and reliable telecommunications due to the
Internet
– The Internet has in turn spurred global competition
– Computer literacy of the workforce
Management Information Systems, 3rd Edition
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Six Components of Information Systems
Figure 1.6 Components of an information system
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What does the word “processing” in data
processing mean?
• Most systems achieve their goals by taking inputs,
processing the inputs, and producing outputs.
• In the case of IS inputs are data and outputs are
information.
• Meaning of processing in this context
– Arithmetic, statistics, sorting, grouping etc.
• Systems viewpoint in problem solving .
– Look for systems
– Determine outputs and work backwards
– Examples
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The Four Stages of Data Processing
• Input: Data are collected and entered into computer.
• Data processing: Data are manipulated into
information using mathematical, statistical, and
other tools.
• Output: Information is displayed or presented.
• Storage: Data and information are maintained for
later use.
• Note input and output are used slightly differently in
this context
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Computer Equipment for Information
System
•
•
•
•
Input devices introduce data into the IS.
The computer processes data through the IS.
Output devices display information.
Storage devices store data and information.
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Types of Information Systems
• Transaction Processing Systems (TPS)
– Record data and perform basic processing
• Cash registers and ATMs
• Management Information Systems (MIS)
– Use recorded transactions and other data to produce
information for problem solving and decision making.
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Types of Managerial IS
• Decision Support Systems (DSS)
– Contain models, or formulas, that
manipulate data into information
– Often answer “what if?” questions
• Group Decision Support Systems (GDSS) help
groups generate ideas, establish priorities,
and reach decisions
• Executive Information Systems (EIS)
– Can gather information from vast amounts
of data for high-level executives
– Highly useful in control and planning
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ISs in Functional Business Areas
• Accounting
– Record business transactions, produce periodic
financial statements, and create reports required
by law
• Finance
– Organize budgets, manage the flow of cash,
analyze investments, and make decisions that
could reduce interest payments and increase
revenues
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ISs in Functional Business Areas
• Marketing
– Analyze demand for various products in different
regions and population groups
• Human Resources
– Help with record keeping and employee evaluation
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ISs in Different Business Sectors
• Manufacturing
– Control inventory, process customer orders,
prepare production schedules, perform quality
assurance, and prepare shipping documents
• Government
– Tax authorities, national insurance and welfare
agencies, defense departments, economic
organizations, immigration authorities
• Service
– ISs are often the backbone of service
organizations
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ISs in Different Business Sectors
• Retail
– Some retail stores (e.g., Wal-Mart, Kmart) are
now linked to communication networks by
satellite.
– Management can determine which items move
quickly and which do not.
• New Businesses
– ISs have made new products and services
possible, such as credit reports and shipment
tracking.
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Ethical and Societal Issues
The Dark Side of IS/IT
• Consumer Privacy
– Organizations collect (and sometimes sell)
huge amounts of data on individuals.
• Employee Privacy
– IT supports remote monitoring of employees,
violating privacy and creating stress.
• Freedom of Speech
– IT increases opportunities for pornography,
hate speech, intellectual property crime, and
other intrusions; prevention may abridge free
speech.
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