Management

Information Systems
Eleventh Edition

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Chapter 1 : Foundations of Information
Systems in Business

McGraw-Hill Education Services Marketing Instructor Manual (Copyright 2018) 2

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 Foundation Business
Concepts Applications

Module 1

Information Development
Technology & Security
Infrastructure Challenges
 Learning Objectives

Understand the concept of a system and

how it relates to information system.
Explain fundamental role and importance of
information system in business.
What are the new trends in information
systems?
Provide examples of several major types of
information systems from business
organizations in the real world.

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 Learning Objectives

Demonstrate familiarity with the myriad of

career opportunities existing in information
systems.
Classify components of information systems
and provide real world examples.

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What is Information System?

An Information System (IS) can be any organized combination of

people, hardware, software, communications networks, data
resources, and policies and procedures that stores, retrieves,
transforms, and disseminates information in an organization.

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Fundamental Roles of IS

Three fundamental roles of Information Systems for a business

enterprise:
• Support of business processes and operations.
• Support of decision making by employees and managers.
• Support of strategies for competitive advantage.

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 Technology Trends

Intelligent category focus more on integration of AI in to every other technology. The technological
solutions that are going to emerge are intelligent

Digital category focus more with connecting the virtual world with the real world in a seamless manner

Mesh category focuses on building network of everything including people, processes and devices.
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Trends in Information Systems

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 What is E-Business?
An online exchange of value (Online exchange of
information, money, resources, services or any
combination thereof falls under the e-business
umbrella)
• Conducting business on the Internet
Using Internet technologies to empower…
• Business processes
• Electronic commerce
• Collaboration within a company
• Collaboration with customers, suppliers, and other
business stakeholders

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How E-Business is Being Used

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 E-Business Use

Reengineering
• Internal business processes
Enterprise collaboration systems
• Support teams and work groups
Electronic commerce
• Buying, selling, marketing, and servicing of
products and services over networks

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Intranet, Extranet & E-Commerce

Intranet
The Internet and Internet- like networks that are inside
the enterprise are called Intranet.

Extranet
The Internet and Internet-like networks that are
between an enterprise and its trading partners are
called Extranets.

e-Commerce
e-commerce is the buying, selling, marketing, and
servicing of products, services, and information over a
variety of computer networks.

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Types of Information Systems

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Information systems combine:
Operations Support Systems
• Transaction Processing systems
• Process Control Systems
• Enterprise Collaboration Systems
Management Support Systems
• Management Information Systems
• Decision Support Systems
• Executive Information Systems
•Other Systems
– Expert Systems
– Knowledge Management Systems
– Strategic Information Systems

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 Two Ways to Process Transactions

Transaction Processing (batch)

• Accumulate transactions over time
• Process periodically
• Example: a bank receives checks during the
day and processes in a batch at night
Online Processing (real-time)
• Process transactions immediately
• Example: a bank processes an ATM withdrawal
immediately

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 Types of Management Support Systems

Management Information Systems (MIS)

• Reports and displays
• Example: daily sales analysis reports
Decision Support Systems (DSS)
• Interactive and ad hoc support
• Example: a what-if analysis to determine
where to spend advertising dollars
Executive Information Systems (EIS)
• Critical information for executives and
managers
• Example: easy access to actions of
competitors

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 Other Information Systems
Expert Systems
• Example: credit application advisor
Knowledge Management Systems
• Support creation, organization, and
dissemination of business knowledge Example:
intranet access to best business practices
Strategic Information Systems
• Help get a strategic advantage over customer
• Examples: shipment tracking, e-commerce Web
systems
Functional Business Systems
• Focus on operational and managerial
applications Examples: accounting, finance, or
marketing

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IT Challenges and Opportunities

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 Responsibility and Accountability

IT plays an integral role in every facet of a

business
Failure is often pinned on IT
Cultivate a culture that embraces change
Break projects into pieces
Set realistic expectations
There will always be problems
• “That’s life in IT”

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Agile Systems Development at Con-Way, Inc.

Old system
• Months long design stage
• Months or years to develop
• Some projects never completed
Agile System
• Small segments with one month deadlines
• Interaction between staff and IT
• Feedback from each segment drives the next
• Faster overall completion and less waste

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Developing IS Solutions

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 Challenges and Ethics of IT

What are the ethical responsibilities?

What are the risks?
How can you protect yourself and your
company from computer crime?

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 Hannaford – Securing Customer Data

Security breach – millions of credit and

debit card numbers stolen
Law suits argued inadequate security
caused risk for fraud
Credit companies complained about
expense to issue new account numbers
Securing sensitive data is a primary
concern

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 IT Careers

IT employment opportunities are strong

Shortages of IT personnel are frequent
Long-term job outlook is positive and
exciting
Starting salaries are high

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 IT Careers

Job increases will be driven by…

• Rapid growth
• Backfilling positions
• Information sharing environments
• Need for problem-solving skills
• Falling hardware and software prices

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IT Careers (Update as per Fig 1.15)

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 Business Analysts serve critical role

CIO – broker between management and IT

Business Analyst
• In the trenches
• Analyzes business need and creates solution
• Communicates solution to technicians
• Balances IT resources with business needs
Business Analyst credentials
• 5-10 years experience
• Technical undergraduate degree and MBA
• Process driven through changes to finish

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 The IS Function

Major functional area of business

Important contributor to
• Efficiency, productivity, morale, customer service
and satisfaction
Major source of information for decisions
Vital ingredient in developing competitive
products and services
Dynamic and challenging career
opportunity
Key component of networked business

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 System Concepts help us understand…

Technology
• Hardware, software, data management,
telecommunications networks
Applications
• Programs to support inter-connected systems
Development
• Developing ways to use information technology
Management
• Emphasizes the quality, strategic business
value, and security of an organization’s
information systems

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 What is a System?
A system is defined as a set of interrelated
components, with a clearly defined boundary,
working together to achieve a common set of
objectives by accepting inputs and producing
outputs in an organized transformation process.
Interrelated components
Defined boundary
Working together
Common objectives
Accepting inputs and producing outputs
Organized transformation process
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 RWC 2: Innovating with IT

New York Times

• Newspaper industry in trouble
• Elevated IT-enabled innovation
• BlackBerry applications
• On-screen reading system

Boston Scientific
• Open sharing of engineering data
• Tighter control near patent application stage

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 Basic Functions of a System

Basic Functions
• Input
• Processing
• Output
Cybernetic System
• Feedback
• Control

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 A Cybernetic System

What are the components for feedback and control?

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A Business as a System

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 Information System Resources

People Resources
• Specialists
• End users
Hardware Resources
• Machines
• Media
Software Resources
• Programs
• Procedures

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 Information System Resources

Data Resources
• Product descriptions, customer records,
employee files, inventory databases
Network Resources
• Communications media, communications
processors, network access and control
software
Information Products
• Management reports and business
documents using text and graphics displays,
audio responses, and paper forms

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 IS Activities

Input of data resources

Processing of data into information
Output of information products
Storage of data resources
Control of system performance

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 RWC 3: Digital Disruption

What is Digital Disruption?

• Digital disruption is the change that occurs
because of implementation of new digital
technologies into the business model.
• Digital disruption may change the value
proposition of existing goods and services.
• Digital disruption is becoming important as we
all live in VUCA world, which is driving change.
• Businesses need to take a critical look at their
risk portfolios and ensure that they have taken
care of those.

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 RWC 4: Role of Information Technology

Sew What?
• Provides custom theatrical draperies and fabrics
worldwide
• Revenue growing more than 45% per year
• Recognized for innovative use of technology to
improve its customers’ experience
• Intuit’s Quick-Books Enterprise Solutions
• Dell PowerEdge servers

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 RWC 5: Critical Importance of IT
Processes
Jet Blue
• Good IT processes are as important as
hardware and software
• Smaller and less critical processes have large
ramifications
• Crisis in 2007
• Information system developed in 24 hours
• Implemented as a full-time system in the
company

Veterans Administration
• System failure took down key applications

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 RWC 6: Spark Batteries Ltd

Product are good, but service being

offered is not satisfactory
Management of inventory of spares is
major concern
Inventory is being managed using manual
systems
Automated system needs to be developed
to improve service level.

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