Chapter 1

Business Information
Systems: An Overview

Management Information Systems, 4th Edition

Learning Objectives
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
Describe how different information systems
serve different levels within an organization
Management Information Systems, 4th Edition

Learning Objectives (Cont.)

Evaluate how telecommunications and database
technology can help implement the goals of
information systems
Recognize the role of information technology in
e-commerce
List major factors to consider when evaluating
information systems and their roles in
organizations
Identify major ethical and societal conflicts
created by widespread use of information systems
Management Information Systems, 4th Edition

Information Systems
Why Do People Need Information?
Individuals: Entertainment and enlightenment
Businesses: Decision making and problem
solving
Gathering
Storing
Manipulating
Management Information Systems, 4th Edition

Data, Information, and

Systems
Data vs. Information
Data
A given or fact: a number, a statement, or a
picture
The raw materials in the production of information

Information
Data that have meaning within a context (a specific
time & space)

Raw data or data that have been manipulated

Management Information Systems, 4th Edition

Data Manipulation
Raw data
Time-consuming to read
Difficult to understand

Manipulated Data
Provides useful information

Management Information Systems, 4th Edition

Generating Information
Raw data are
processed in an IS to
create final useful
information
Process:
Manipulation of
data
Computer-based
ISs: process data to
produce information
Management Information Systems, 4th Edition

Information: Important Resource

Information
must be
useful

Relevant
Complete
Accurate
Current
Cost
effective in
business

Management Information Systems, 4th Edition

What Is a System?
System: A set of components that work together to
achieve a common goal
Subsystem: One part of a system where the products
of more than one system are combined to reach an
ultimate goal
Closed system: Stand-alone system that has no
contact with other systems; no flow-ins or flow-outs
Open system: System that interfaces with other
systems

Management Information Systems, 4th Edition

Systems and Subsystems

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Information and Managers

Systems thinking:
Viewing organization in terms of
suborganizations or subsystems
decomposition
A framework for problem solving and decision
makingconquering

Managers focus on overall goals and

operations of businesssynthesizing
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Information and Managers (Cont.)

Systems thinking (Cont.)
Information Map: data and information flow within
an organization
()
(key corporate resources: M.I.T.)

Information Technology: all technologies that

facilitate construction and maintenance of
information systems
()
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The Benefits of HumanComputer Synergy

Synergy: combined
resources produce
output exceeding the
sum of the outputs of
the same resources
employed separately
Translates human
thought into efficient
processing of large
amounts of data
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Trends of information systems

Power of computers increasing; prices dropping
Increasing p/p (performance/price) ratio

Increase in programming variety and ingenuity

Internet access faster and more reliable

Internet growth resulting in opportunities

Increasing ratio of computer-literate workforce

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Components of an Information
System

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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 (for the 1st or 2nd order
feedback loop)
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Computer Equipment for

Information System
Input devices: introduce data into the IS
Processor: manipulates data through the IS
Output devices: display information
Storage devices: store data and information

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Input-process-output-storage
devices

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ISs: From Recording

Transactions
to Providing Expertise
Transaction Processing Systems (TPS)
Record data and perform basic processing
Cash registers and ATMs

Management Information Systems (MIS)

Recorded transactions and other data produce
information for problem solving and decision
making
Customer purchasing power analysis
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Types of MISs
Decision Support Systems (DSS)
Contain models, or formulas, that manipulate data into
information
Often answer what if? questions,
Scenario simulation

Group Decision Support Systems (GDSS)

Generate ideas, establish priorities, and reach
decisions in group environment
A case of Delphi method
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Types of MISs (Cont.)

Executive Information Systems (EIS)
Can gather information from vast amounts of data for highlevel executives
Highly useful in control and planning
Summarized report with highlights

Expert Systems (ES)

Programmed with human expertise
Can help solve problems of unstructured nature
Multiple criteria planning & the heuristic method (with the 2nd order
feedback loop)
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Types of MISs (Cont.)

Geographic Information Systems (GIS)
Represents local conditions or features
Allows planning, decision-making, and
monitoring of local conditions or activities

On-demand Output
Managers can obtain reports tailored to their
needs at any time, or even anywhere
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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

(Cont.)
Marketing
Analyze demand for various products in
different regions and population groups

Human Resources
Help with record keeping and employee
evaluation, training, and dispatching
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ISs in Different Business Sectors

Manufacturing
Allocate resources such as personnel, raw
material, and time

Control inventory, process customer orders,

prepare production schedules, perform quality
assurance, and prepare shipping documents

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ISs in Different Business Sectors

(Cont.)
Service
ISs are often the backbone of service organizations
E.g., quick response, FAQs, complain trace, etc.

Retail
Some retail stores (e.g., Wal-Mart, Sears) are now
linked to communication networks by satellite
Management can determine which items move quickly
and which do not
Returns arrangement
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ISs in Different Business Sectors

(Cont.)
New Businesses
ISs have made new products and services possible,
such as credit reports and shipment tracking
Interactive new product designing activities across
multiple divisions

Government
Tax authorities, national insurance and welfare
agencies, defense departments, economic
organizations, immigration authorities
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Shared Data Resources

Effective way to operate: different systems
share data from the same pool
Companys database: one of the most
powerful resources, a corporate asset
Categorized and structured data can be
manipulated to produce useful information

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Shared Data Resources

(Cont.)

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E-Commerce
Business-to-business and business-toconsumer transactions done electronically via
networks
Database management online makes
information cheaper to distribute
E-commerce is now synonymous with doing
business on the Internet
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Why Study IS?

Knowledge Workers
Employers seek computer-literate professionals who
know how to use information technology

Degrees in IS
Computer Science and Management Information
Systems

Information Systems Careers

Systems analyst, specialist in enterprise resource
planning (ERP), database administrator,
telecommunications specialist, consulting, etc.
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Ethical and Societal Issues

The Not-So-Bright Side
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
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Ethical and Societal Issues

The Not-So-Bright Side
Freedom of Speech
Opportunities increase for pornography, hate
speech, intellectual property crime, and other
intrusions
Prevention may abridge free speech

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Ethical and Societal Issues

The Not-So-Bright Side
IT Professionalism
No mandatory or enforced code of ethics for IT
professionals--unlike other professions

Social Inequality
Less than 20% of the worlds population have
ever used a PC; less than 3% have Internet
access
Increasing gap or not?
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Summary
Information Systems are essential to
business
Data is processed into useful information for
problem solving and decision making
Information systems provide information for
different levels within an organization
There are major factors to consider when
evaluating information systems
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