An Introduction to Information

Systems

Prof. Himanshu Joshi

himanshu@imi.edu

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COURSE OBJECTIVES

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To explain the relationship between business challenges and

managers need for information systems
To understand the types of information systems that are needed
to support the various levels of a business enterprise including
banking & financial
To understand the process of designing and developing an
information system for B&FS
To understand the infrastructure needed for B&FS information
system.
To understand the role of IS in electronic business and enterprise
wide computing
To develop an awareness of critical issues around information
systems like data security, privacy and ethical use of information.
To demonstrate managerial problem solving skills using
exercises, case scenarios and project.
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EVALUATION
Case
Quiz
Term Project
Mid Term
End Term

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10 + 5 %
15%
20%
20%
30%

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Management Information Systems

Information Systems in Global Business Today

Discussion Points?

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Why study information systems?

Why information systems?
Information systems, business and globalization.
What is an IS, its management, organization, and technology
components.
Various types of IS
Role of IS at various levels of management.
Integration of business processes and information systems.
IS applications and organizational performance.

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Why study Information System?

Computers are everywhere
People/Workers all have to use computers and depend on
information systems in their work
Information systems are at the foundation of organizations
today
Electronic commerce is rapidly becoming the dominant way
of doing business, of transacting business and managing
organizations
Business to Business (B2B), _ to Customer, _ to Employee
Business to Government, Government to Consumer,
To help you
Advance your career
Be a better manager
In your own personal life
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IPL and IS The relationship?

Cricket is just like any other business today- How has
IPL used IS?
Team composition
Team Selection
Performance evaluation
Strengths
Weaknesses
Analytical software help find answers to questions

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Why Information System?

Because of the changing business environment
Globalization
Transformation of Industrial Economies
Transformation of the Business Enterprise
Emergence of the Digital Firm

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The Role of Information Systems in Business Today

Globalization
Management and Control in a global marketplace
Competition in world markets
Global work-groups and delivery systems
Internet has drastically reduced costs of operating on
global scale

Transformation of Industrial Economy

Knowledge & Information based economies
New products and services; Time based competition
Shorter Product Life and Turbulent Environment
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The Role of Information Systems in Business Today

Transformation of Business Enterprise

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Flattening
Decentralization
Flexibility
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork

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The Role of Information Systems in Business Today

Emergence of a fully digital firm

Significant business relationships are digitally enabled
and mediated
Core business processes are accomplished through
digital networks
Key corporate assets are managed digitally
Rapid sensing and responding to environmental
changes
Digital firms offer greater flexibility in organization and
management
Time shifting, space shifting
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Digital Economy
An economy based on digital technologies,
including communication networks (the Internet ,
intranets, and extranets), computers, software,
and other related technologies; also sometimes
called the Internet economy, the new economy,
or the Web economy.
Doing business in the digital economy using
Web-based systems on the Internet and other
electronic networks.

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Networked Computing
e-business/ e-commerce the conducting of business
functions (e.g., buying and selling goods and services,
servicing customers, collaborating with business partners)
electronically, in order to enhance an organizations operations.
The infrastructure for e-business is network computing,
which connects computers and other electronic devices via
telecommunication networks.
These computers may be connected to the global networked
environment, known as the internet, or to its counter part
within organizations, called an intranet, many companies link
their intranet to those of their business partners over networks
called extranets.

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Digital networking and communications

infrastructures includes:
A vast array of digitizable product -data bases, news and
information, books, magazines, TV and radio
programming , movies, electronic games, musical CDs,
and software- which are delivered over the digital
infrastructure any time, anywhere in the world
Consumers and firm conducting financial transaction
digitally-through digital currencies or financial tokens
carried via networked computers and mobile devices
Physical goods such as home appliances and
automobiles that are embedded with microprocessors
and networking capabilities.
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How IS are transforming business?

The Role of Information Systems in Business Today

Growing interdependence between ability to use

information technology and ability to implement
corporate strategies and achieve corporate goals

Business firms invest heavily in information

systems to achieve six strategic business
objectives:

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Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
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Strategic Business Objectives

The Role of Information Systems in Business Today

Operational excellence:
Improvement of efficiency to attain higher profitability
Information systems, technology an important tool in
achieving greater efficiency and productivity
Wal-Marts RetailLink system links suppliers to stores for
superior replenishment system

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The Role of Information Systems in Business Today

New products, services, and business models:

Business model: describes how company produces,
delivers, and sells product or service to create wealth
Information systems and technology a major enabling
tool for new products, services, business models
Examples: Apples iPod, iTunes, and iPhone, Netflixs Internetbased DVD rentals

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The Role of Information Systems in Business Today

Customer and supplier intimacy:

Serving customers well leads to customers returning,
which raises revenues and profits
Example: High-end hotels that use computers to track
customer preferences and use to monitor and customize
environment

Intimacy with suppliers allows them to provide vital

inputs, which lowers costs
Example: Maruti Suzuki information system which links sales
records to contract manufacturer

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The Role of Information Systems in Business Today

Improved decision making

Without accurate information:
Managers must use forecasts, best guesses, luck
Leads to:
Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times

Poor outcomes raise costs, lose customers

Example: Organizations use digital dashboard to

provide managers with real-time data on customer
complaints, network performance, line outages, etc.
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The Role of Information Systems in Business Today

Competitive advantage

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Delivering better performance

Charging less for superior products
Responding to customers and suppliers in real time
Example: Toyota and TPS (Toyota Production
System) enjoy a considerable advantage over
competitors information systems are critical to the
implementation of TPS

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The Role of Information Systems in Business Today

Survival
Information technologies as necessity of
business
May be:
Industry-level changes, e.g. Citibanks introduction
of ATMs
Governmental regulations requiring record-keeping

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How technology has changed the way we do

business
Example

Old

New

Buying and selling

text book

Visit the bookstore

Registering for
classes

Walk around campus to

Access campus web site
Departments, Registrars office,
etc.

Photography

Buy film, use camera, take

picture, take it for processing

Use digital camera

Paying for Gasoline

Fill up your car, go inside, pay

cash or credit card

Insert credit card, receive

authorization, fill gas

Paying the
Transportation

Pay cash, metal tokens

Metro cards electronic

cards

Paying for goods

Visit store, take the item, pay ,

go

Use self service kiosks

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Visit web site for

publishers and retailers

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The Role of Information Systems in Business Today

The Interdependence Between Organizations and

Information Technology

In contemporary systems there is a growing interdependence between a firms

information systems
and its business capabilities. Changes in strategy, rules, and business processes
increasingly require changes in hardware, software, databases, and
telecommunications. Often, what the organization would like to do depends on what its
systems will permit it to do.

Figure 1-2

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What is a System?

INPUT

PROCESS

OUTPUT

FEEDBACK

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A business as a system

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What is an Information System?

An IS can be any organized combination of
people, hardware, software, communication
networks, and data resources that stores
and retrieves, transforms and disseminates
information in an organization.
An IS can also be defined as a set of
interrelated components that collect (or
retrieve), process, store and distribute
information to support decision making and
control in an organization.
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What is an Information System

Perspectives on Information Systems

Three activities produce information organizations need

Input: Captures raw data from organization or external
environment
Processing: Converts raw data into meaningful form

Output: Transfers processed information to people or

activities that use it
Feedback:
Output returned to appropriate members of organization to
help evaluate or correct input stage

Computer/Computer program vs. information system

Computers and software are technical foundation and tools,
similar to the material and tools used to build a house

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Information systems model

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Components of an IS
People
End users: the people who use the IS or the
information from the IS
IS specialists: the people who develop and operate IS
Hardware Resources
All physical devices used in information processing
Machines, data media, peripherals
Software Resources
All information processing instructions including
programs and procedures
System software, application software and procedures
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Components of an IS (cont.)
Data Resources
Facts about the business transactions
Processed and organized information
Databases of organized data
Network Resources
Communications media
Network infrastructure: hardware and software
The Internet, intranets and extranets

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Data versus Information

Data are raw facts about physical phenomena or
business transactions
Information is data that has been converted into
meaningful and useful context for end users
Example:
Sales data is names, quantities and dollar amounts
Sales information is amount of sales by product type,
sales territory or salesperson

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Data and Information

Perspectives on Information Systems

Raw data from a supermarket checkout counter can be processed and organized to produce
meaningful information, such as the total unit sales of dish detergent or the total sales
revenue from dish detergent for a specific store or sales territory.

Figure 1-3
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Data versus Information

Data raw facts
Intel stock price $32.375
Temperature 75 F.

Information facts within a given context

Intel stock price after the 2-1 stock split yesterday
settled at $32.375/share now you know the number
of shares and their value
The temperature at midnight in Times Square, NYC
was 75 F NYC winter heat wave still continues

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Information System (IS) versus

Information Technology (IT)
IS is all the components and resources
necessary to deliver information and
functions to the organization
IT is hardware, software, networking and
data management
In theory, IS could be paper based
But we will focus on Computer-Based
Information Systems (CBIS)
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Computer Based Information

Systems (CBIS)
Formal Systems
Fixed definitions of data procedures
Collecting, Storing, Processing,
Disseminating, Using Data.
CBIS are much more than just
computers

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Putting Things in Context

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Information Technology - the hardware, software, and networks that

make Information Systems possible.
Information System - a system that uses information technology to
capture, transmit, store, retrieve, manipulate, and display
information.
Business process - a related group of steps or activities that use
people, information, and other resources, to create value for internal
or external customers.
Firm (or organization) - consists of a large number of interdependent
business processes that work together to generate products or
services in a business environment.
Business environment - includes the firm and everything else that
affects its success, such as competitors, suppliers, customers,
regulatory agencies, and demographic, social, and economic
conditions.
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What does IS do for a business?

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Trends in Information Systems

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Information Systems:
A Business Perspective
Perspectives on Information Systems

H/W, S/W, Databases,

Networks, the Internet,
intranets and extranets,
World Wide Web

People, Structure,
processes, politics
& culture

Strategies to manage challenge, allocation of

resources, new product and services
Using information systems effectively requires an understanding of the organization,
management, and information technology shaping the systems. An information system
creates value for the firm as an organizational and management solution to challenges
posed by the environment.

Figure 1-5

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Importance of Complementary Assets

Perspectives on Information Systems

Investing in information technology does not

guarantee good returns
Considerable variation in the returns firms
receive from systems investments
Factors:
Adopting the right business model
Investing in complementary assets (organizational
and management capital)

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Perspectives on Information Systems

Complementary assets include:

Organizational investments, e.g.
Appropriate business model
Efficient business processes, Strong team

Managerial investments, e.g.

Incentives for management innovation
Teamwork and collaborative work environments

Social investments, e.g.

The Internet and telecommunications infrastructure
Technology standards, laws, regulations
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Information Systems and Levels

KIND OF SYSTEM

GROUPS SERVED

STRATEGIC LEVEL

SENIOR
MANAGERS

MANAGEMENT LEVEL

MIDDLE
MANAGERS

KNOWLEDGE LEVEL

OPERATIONAL
LEVEL
SALES &
MARKETING

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KNOWLEDGE &
DATA WORKERS

MANUFACTURING

FINANCE

OPERATIONAL
MANAGERS
ACCOUNTING HUMAN
RESOURCES

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Types of Information System

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Operations support systems

What are they?
Efficiently process business transactions
Control industrial processes
Support communications and collaboration
Update corporate databases

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Types of Operational Support Systems

Transaction Processing Systems
Record and process data from business transactions
Examples: sales processing, inventory systems,
accounting systems
Process Control Systems
Monitor and control physical processes
Example: in a petroleum refinery use sensors to
monitor chemical processes
Enterprise Collaboration Systems/ Office
Automation Systems
Enhance team and work group communications
Examples: e-mail, videoconferencing
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A Payroll TPS

A Payroll TPS
A TPS for payroll
processing captures
employee payment
transaction data (such
as a time card).
System outputs
include online and
hard-copy reports for
management and
employee paychecks.

Figure 2-2

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TRANSACTION PROCESSING SYSTEMS

(TPS)
OPERATIONAL LEVEL
INPUTS: TRANSACTIONS, EVENTS
PROCESSING: UPDATING
OUTPUTS: DETAILED REPORTS
USERS: OPERATIONS PERSONNEL
EXAMPLE: ACCOUNTS PAYABLE

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TYPICAL TPS APPLICATIONS

Sales & Marketing Systems

MAJOR FUNCTIONS OF SYSTEMS:

Sales Management; Market Research;
Promotion; Pricing; New Products
MAJOR APPLICATION SYSTEMS:
Sales Order Info System; Market
Research System; Pricing System
*

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TYPICAL TPS APPLICATIONS

Manufacturing & Production Systems

MAJOR FUNCTIONS OF SYSTEMS:

Scheduling; Purchasing; Shipping /
Receiving; Engineering; Operations
MAJOR APPLICATION SYSTEMS:
Materials Resource Planning
Systems; Purchase Order Control
Systems; Engineering Systems;
Quality Control Systems
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TYPICAL TPS APPLICATIONS

Finance & Accounting Systems
MAJOR FUNCTIONS OF SYSTEMS:
Budgeting; General Ledger; Billing:
Cost Accounting
MAJOR APPLICATION SYSTEMS:
General Ledger; Accounts Receivable
/ Payable; Budgeting; Funds
Management Systems

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TYPICAL TPS APPLICATIONS

Human Resources Systems

MAJOR FUNCTIONS OF SYSTEMS:

Personnel Records; Benefits;
Compensation; Labor Relations;
Training
MAJOR APPLICATION SYSTEMS:
Payroll; Employee Records; Benefit
Systems; Career Path Systems;
Personnel Training Systems
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TYPICAL TPS APPLICATIONS

Other Types (e.g., University)

MAJOR FUNCTIONS OF SYSTEMS:

Admissions; Grade Records; Course
Records; Alumni
MAJOR APPLICATION SYSTEMS:
Registration System; Student
Transcript System; Curriculum Class
Control System; Alumni Benefactor
System
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Types of Management Support System

Management Information Systems (MIS)
Provide reports and displays to managers
Example: daily sales analysis reports
Decision Support Systems (DSS)
Provide interactive ad hoc support for decision
making
Example: A what-if-analysis to determine where to
spend advertising dollars
Executive Information Systems (EIS)
Provide critical information for executives and
managers
Example: easy access to actions of competitors
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Management Information System

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Management Level
Inputs: High Volume Data
Processing: Simple Models
Outputs: Summary Reports
Users: Middle Managers
Structured & Semi-Structured Decisions
Report Control Oriented
Past & Present Data
Internal Orientation
Lengthy Design Process
Example: Annual Budgeting

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TPS Data for MIS Applications

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The Order Fulfillment Process

Figure 2-1

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Fulfilling a customer order involves a complex set of steps that requires the close
coordination of the sales, accounting, and manufacturing functions .
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Sample MIS Management Report

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Classification of Information Systems

from User Perspective
Systems from a constituency perspective
Transaction processing systems:
supporting operational level employees
Management information systems and
decision-support systems: supporting
managers
Executive support systems: supporting
executives
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Decision Support System

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Middle Management Level

Inputs: Low Volume Data
Processing: Interactive
Outputs: Decision Analysis
Users: Professionals, Staf
Example: Contract Cost Analysis
Flexible, Adaptable, Quick
User Controls Inputs/Outputs
No Professional Programming
Supports Decision Process
Sophisticated Modeling Tools
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Executive Support Systems

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Strategic Level
Inputs: Aggregate Data
Processing: Interactive
Outputs: Projections
Users: Senior Managers and Top Level Management
Designed To The Individual
Ties CEO To All Levels
Very Expensive To Keep Up
Extensive Support Staf
Example: 5 Year Operating Plan

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INTERRELATIONSHIPS
AMONG SYSTEMS
ESS

MIS

KWS
OAS
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DSS

TPS
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