• The value of information is directly linked to how it helps
decision makers achieve the organization’s goals
• Discuss why it is important to study and understand
information systems
• Distinguish data from information and describe the
characteristics used to evaluate the quality of data
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• Models, computers, and information systems are
constantly making it possible for organizations to
improve the way they conduct business
• Name the components of an information system and
describe several system characteristics
• Identify the basic types of models and explain how they are
used
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• Knowing the potential impact of information systems and
having the ability to put this knowledge to work can result in
a successful personal career, organizations that reach their
goals, and a society with a higher quality of life
• List the components of a computer-based information system
• Identify the basic types of business information systems and
discuss who uses them, how they are used, and what kinds of
benefits they deliver
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• System users, business managers, and information
systems professionals must work together to build a
successful information system
• Identify the major steps of the systems development
process and state the goal of each
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• Information systems must be applied thoughtfully and
carefully so that society, business, and industry can reap
their enormous benefits
• Describe some of the threats to security and privacy that
information systems and the Internet can pose
• Discuss the expanding role and benefits of information
systems in business and industry
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Introduction
• Information system (IS)
• A set of interrelated components that collect, manipulate,
and disseminate data and information and provide feedback
to meet an objective
• Examples: ATMs, airline reservation systems, course
reservation systems
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Information Concepts:
Data Versus Information
• Data: raw facts
• Information: collection of facts organized in such a
way that they have additional value beyond the facts
themselves
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Table 1.1: Types of Data
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Figure 1.1: Defining and Organizing
Relationships Among Data Creates Information
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Figure 1.2: The Process of
Transforming Data into Information
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Table 1.2: Characteristics of Valuable Data
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Table 1.2: Characteristics of Valuable
Data (continued)
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System and Modeling Concepts
• System: a set of elements or components that interact to
accomplish goals
• Components of a system
• Input
• Processing
• Output
• Feedback
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Figure 1.3: Components of a System
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System Components and Concepts
• System boundary: defines the system and distinguishes
it from everything else (i.e., the environment)
• Configuration: the way system elements are organized or
arranged
• Systems can be classified as simple or complex, open or
closed, stable or dynamic, adaptive or nonadaptive, and
permanent or temporary
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Table 1.3: Systems Classifications and
Their Primary Characteristics
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System Performance and Standards
• Efficiency: a measure of what is produced divided by
what is consumed
• Effectiveness: extent to which system attains its goals
• System performance standard: a specific objective of a
system
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System Variables and Parameters
• System variable: quantity or item controlled by the
decision maker
• System parameter: value or quantity that cannot be
controlled (e.g., the cost of a raw material)
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Modeling a System
• Model: an abstraction that is used to represent reality
• Four major types of models: narrative (based on words);
physical (tangible); schematic (graphic representation);
mathematical (arithmetic representation)
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Figure 1.6: Four Types of Models
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Figure 1.7: The Components of an
Information System
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Input, Processing, Output, Feedback
• Input: activity of gathering and capturing raw data
• Processing: converting or transforming data into useful
outputs
• Output: production of useful information, usually in
form of documents and reports
• Feedback: output used to make changes to input or
processing activities
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Computer-Based Information Systems
• Computer-based information system (CBIS)
• A single set of hardware, software, databases,
telecommunications, people, and procedures that are
configured to collect, manipulate, store, and process data
into information
• Examples: a company’s payroll systems, order entry
system, and inventory control systems
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Figure 1.8: The Components of a
Computer-Based Information System
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Business Information Systems
• Most common types of information systems used in
business organizations include:
• Electronic and mobile commerce systems
• Transaction processing systems
• Management information systems
• Decision support systems
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Electronic and Mobile Commerce
• E-commerce: any business transaction executed
electronically between parties
• Parties involved include companies (B2B); companies
and consumers (B2C); consumers and other consumers
(C2C); businesses and the public sector; consumers and
the public sector
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Transaction Processing Systems and
Enterprise Resource Planning
• Transaction: any business-related exchange, such as
payments to employees, sales to customers, and payments
to suppliers
• Transaction processing system (TPS): an organized
collection of people, procedures, software, databases, and
devices used to record completed business transactions
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Figure 1.11: A Payroll Transaction
Processing System
The inputs (numbers of employee hours worked and pay rates) go
through a transformation process to produce outputs (paychecks)
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Enterprise Resource Planning
• Enterprise resource planning (ERP) system: set of
integrated programs that can manage a company’s entire
set of business operations
• ERP systems often coordinate planning, inventory
control, production, and ordering
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Information and Decision Support
Systems
• Management information system (MIS): an organized
collection of people, procedures, software, databases, and
devices that provides routine information to managers and
decision makers
• Primary focus of an MIS is on operational efficiency
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Figure 1.12: Functional Management
Information Systems
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Management Information Systems
• MIS outputs
• Scheduled reports
• Demand reports
• Exception reports
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Decision Support Systems
• Decision support system (DSS): an organized collection
of people, procedures, software, databases, and devices
used to support problem-specific decision making
• Focus of a DSS is on decision-making effectiveness
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Figure 1.13: Essential DSS Elements
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Specialized Business Information Systems
• Artificial intelligence (AI) systems
• Virtual reality systems
• Expert systems
• Other special-purpose business information systems
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Figure 1.14: The Major Elements of
Artificial Intelligence
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Systems Development
• Systems development: the activity of creating or
modifying existing business systems
• Systems investigation: gaining a clear understanding of
the problem to be solved or opportunity to be addressed
• Systems analysis: defines the problems and opportunities
of the existing system
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Figure 1.17: An Overview of
Systems Development
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Systems Development (continued)
• Systems design: determines how new system will work
to meet business needs defined during systems analysis
• Systems implementation: creating or acquiring the
various system components defined in design step,
assembling them, and putting new system into operation
• Systems maintenance and review: check and modify
system so that it continues to meet changing business
needs
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Information Systems in Society,
Business, and Industry
• Information systems must be implemented thoughtfully
and carefully
• Information systems face a variety of threats from
unethical people
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Figure 1.18: Attacks on Businesses and
Other Organizations in One Year
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Figure 1.19: The Cost and Cause of
Computer Attacks
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Computer and Information Systems
Literacy
• Computer literacy: knowledge of computer systems and
equipment and the ways they function
• Information systems literacy: knowledge of how data
and information are used
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Information Systems in the Functional
Areas of Business
• Finance and accounting (e.g., forecast revenues and
business activity; analyze investments; perform audits)
• Sales and marketing (e.g., product analysis; promotion
analysis; price analysis)
• Manufacturing (e.g., process orders; develop schedules;
control inventory)
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Information Systems in Industry
• Airline industry (e.g., Internet auction sites)
• Investment firms (e.g., analyze stocks and bonds)
• Banks (e.g., online check payment)
• Transportation industry (e.g., schedule trucks and trains)
• Publishing companies (e.g., analyze markets)
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Information Systems in Industry
(continued)
• Healthcare organizations (e.g., track patient records)
• Retail companies (e.g., process customer orders)
• Power management and utility companies (e.g., monitor
and control power generation and usage)
• Professional services (e.g., provide information on
products and services to its consultants)
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Summary
• Data: raw facts
• Information: collection of facts organized in such a way
that they have value beyond the facts themselves
• System: a set of elements that interact to accomplish a
goal
• Components of a system: input, processing, output, and
feedback
• A model is an abstraction that is used to represent reality
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Summary (continued)
• Computer-based information system (CBIS): a single
set of hardware, software, databases, telecommunications,
people, and procedures that are configured to collect,
manipulate, store, and process data into information
• Transaction processing system (TPS): an organized
collection of people, procedures, software, databases, and
devices used to record completed business transactions
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Summary (continued)
• Management information system (MIS): an organized
collection of people, procedures, software, databases, and
devices used to provide routine information to managers
and decision makers
• Decision support system (DSS): an organized collection
of people, procedures, software, databases, and devices
used to support problem-specific decision making
• Systems development: the activity of creating or
modifying existing business systems
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