McGraw-Hill/Irwin

Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

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Course Concent
Business Models and Competitive Strategies IT and the Digital Organization IT Enterprise Systems E-Commerce, Security and Ethics IT Management

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Course Material
Management Information Systems by James A. O'Brien, George Marakas, Publisher: McGraw-Hill/Irwin; 9th edition (October 23rd 2008) All books for Management and Strategy in Information Technology

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Online Materials for reading

Baseline Magazine www.baselinemag.com Business Intelligence Review www.bireview.com Business Week www.businessweek.com CFO Magazine www.cfo.com CIO Insight www.cioinsight.com CIO Magazine www.cio.com Computer World www.computerworld.com CSO Magazine www.csoonline.com Darwin Magazine www.darwinmag.com

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Online Materials for reading (2)

Fast Company www.fastcompany.com Info World www.infoworld.com Internet World www.iw.com IT Business Edge www.itbusinessedge.com Optimize Magazine www.optimizemag.com Red Herring www.redherring.com Strategy and Business www.strategy-business.com CFO www.cfo.com Communications of the CM www.acm.org/pubs

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Online Materials for reading (3)

Harvard Business Review www.hbr.com Information Systems Management www.ismjournal.com Journal of Management Information Systems jmis.bentley.edu MIT Sloan Management Review smr.mit.edu Managing the Digital Enterprise www.digitalenterprise.org NetMBA www.netmba.com QuickMBA www.quickmba.com Wikipedia www.wikipedia.org
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1
Foundations of Information Systems in Business

McGraw-Hill/Irwin

Copyright 2008, The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives
1. Understand the concept of a system and how it relates to information systems 2. Explain why knowledge of information systems is important for business professionals
Identify five areas of information systems knowledge needed

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Learning Objectives
3. Give examples to illustrate how business applications of information systems can support a firms
Business processes Managerial decision making Strategies for competitive advantage

4. Provide examples of information systems from your experiences with business organizations in the real world

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Learning Objectives
5. Identify challenges that a business manager might face in managing the successful, ethical development and use of information technology 6. Provide examples of the components of real world information systems 7. Become familiar with the myriad of career opportunities in information systems

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Foundation Concepts
Why study information systems and information technology?
Vital component of successful businesses Helps businesses expand and compete Improves efficiency and effectiveness of business processes Facilitates managerial decision making and workgroup collaboration

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Case 1: Heidelberg, Honeywell, Eaton

Smart services, smart products
Using information technology to monitor, intervene, assist

Machines relay information via the Internet and wireless systems

Optimized performance Minimized maintenance and repair costs Less unanticipated downtime

Increased value justifies premium charge

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Case Study Questions

1. Why should manufacturing companies build smart products and provide smart services?
What business benefits can be gained? Provide examples beyond those discussed in this case

2. What information technologies are used by the companies in this case to build smart products and provide smart services?
What other IT components might be used? Give examples of the capabilities they would provide
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Case Study Questions

3. What are some limitations of a smart products and smart services strategy?
Give several examples that a business might encounter Explain how it might overcome them

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What is a System?
A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives

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What is an Information System?

An organized combination of
People Hardware and software Communication networks Data resources Policies and procedures

This system
Stores, retrieves, transforms, and disseminates information in an organization

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Information Technologies
Information Systems
All the components and resources necessary to deliver information and functions to the organization Could be paper based

Information Technologies
Hardware, software, networking, data management

Our focus will be on computer-based information systems (CBIS)

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What Should Business Professionals Know?

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Fundamental Roles of IS in Business

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Trends in Information Systems

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What is E-Business?
Using Internet technologies to empower
Business processes Electronic commerce Collaboration within a company Collaboration with customers, suppliers, and other business stakeholders

In essence, an online exchange of value

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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 communications, coordination and coordination among teams and work groups

Electronic commerce
Buying, selling, marketing, and servicing of products and services over networks

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Types of Information Systems

Operations Support Systems
Efficiently process business transactions Control industrial processes Support communication and collaboration Update corporate databases

Management Support Systems

Provide information as reports and displays Give direct computer support to managers during decision-making

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Purposes of Information Systems

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Operations Support Systems

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

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Types of Operations Support Systems

Transaction Processing Systems
Record and process business transactions Examples: sales processing, inventory systems, accounting systems

Process Control Systems

Monitor and control physical processes Example: using sensors to monitor chemical processes in a petroleum refinery

Enterprise Collaboration Systems

Enhance team and workgroup communication Examples: email, video conferencing
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Two Ways to Process Transactions

Batch Processing
Accumulate transactions over time and process periodically Example: a bank processes all checks received in a batch at night

Online Processing
Process transactions immediately Example: a bank processes an ATM withdrawal immediately

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Management Support Systems

What do they do?
Provide information and support for effective decision making by managers
Management information systems Decision support systems Executive information systems

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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
Provide expert advice Example: credit application advisor

Knowledge Management Systems

Support creation, organization, and dissemination of business knowledge throughout company Example: intranet access to best business practices

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Other Information Systems

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 of basic business functions Examples: accounting, finance, or marketing

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IT Challenges and Opportunities

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Measuring IT Success
Efficiency
Minimize cost, time, and use of information resources

Effectiveness
Support business strategies Enable business processes Enhance organizational structure and culture Increase customer and business value

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Developing IS Solutions

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Challenges and Ethics of IT

Application of IT
Customer relationship management Human resources management Business intelligence systems

Potential Harm
Infringements on privacy Inaccurate information Collusion

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Challenges and Ethics of IT

Potential Risks
Consumer boycotts Work stoppages Government intervention

Possible Responses
Codes of ethics Incentives Certification

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Ethical Responsibilities
What uses of IT might be considered improper or harmful to other individuals or society? What is the proper business use of the Internet or a companys IT resources? How can you protect yourself from computer crime?

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IT Careers
Economic downturns have affected all job sectors, including IT Rising labor costs are pushing jobs to India, the Middle East, and Asia-Pacific countries However, IT employment opportunities are strong, with new jobs emerging daily Shortages of IT personnel are frequent The long-term job outlook is positive and exciting
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IT Careers

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IT Careers
Job increases will be driven by
Rapid growth in computer system design and related services The need to backfill positions Information sharing and client/server environments The need for those with problem-solving skills Falling hardware and software prices, which will fuel expanded computerization of operations

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The IS Function
The IS function is
A major functional area of business An important contributor to operational efficiency, employee productivity, morale, customer service and satisfaction A major source of information and support for decision making A vital ingredient in developing competitive products and services in the global marketplace A dynamic and challenging career opportunity A key component of todays networked business
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System Concepts: A Foundation

System concepts help us understand
Technology: hardware, software, data management, telecommunications networks Applications: to support inter-connected information systems Development: developing ways to use information technology includes designing the basic components of information systems Management: emphasizes the quality, strategic business value, and security of an organizations information systems
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Real World Case: Lufthansa

Lufthansa wants to
Keep 3,500 pilots
Trained on the latest technology and procedures Plugged into the corporate infrastructure Informed about schedules, weather events, and other facts that affect their jobs

Control costs Provide Internet access to passengers

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Case Study Questions

Are many of Lufthansas challenges identified in the case similar to those being experienced by other businesses in todays global economy? What other tangible and intangible benefits, beyond those identified by Lufthansa, might a mobile workforce enjoy as a result of deploying mobile technologies?

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Case Study Questions

Lufthansa was clearly taking a big risk with their decision to deploy notebook computers to their pilots. What steps did they take to manage the risk, and what others might be needed in todays business environment?

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What is a System?
A system is
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

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Basic Functions of a System

Input
Capturing and assembling elements that enter the system to be processed

Processing
Transformation process that converts input into output

Output
Transferring transformed elements to their ultimate destination

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Cybernetic System
All systems have input, processing, and output A cybernetic system, a self-monitoring, selfregulating system, adds feedback and control:
Feedback is data about the performance of a system Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal

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A Cybernetic System

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A Business as a System

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Other System Characteristics

If a system is one of the components of a larger system, it is a subsystem
The larger system is an environment

Several systems may share the same environment

Some may be connected via a shared boundary, or interface

Types of systems
Open Adaptive
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Components of an IS

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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 Resources
Management reports and business documents using text and graphics displays, audio responses, and paper forms
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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 Examples:
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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IS Activities
Input of data resources
Data entry activities

Processing of data into information

Calculations, comparisons, sorting, and so on

Output of information products

Messages, reports, forms, graphic images

Storage of data resources

Data elements and databases

Control of system performance

Monitoring and evaluating feedback
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Recognizing Information Systems

Business professionals should be able to look at an information system and identify
The people, hardware, software, data, and network resources they use The type of information products they produce The way they perform input, processing, output, storage, and control activities

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Case 3: Aviall, Inc.

Supplier of airplane parts and components Had lost track of its inventory
Price-tracking software didnt work with inventory control or purchasing forecasting Sent wrong parts to wrong customers Sales falling

Needed a middleware vision

Get all the software to work together

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Case Study Questions

Why do you think that Aviall failed in their implementation of an airplane parts and components inventory control system? How has information technology brought new business success to Aviall? How did IT change Avialls business model? How could other companies use Avialls approach to the use of IT to improve their business success?

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Case 4: Continental Airlines

Building customer loyalty has become crucial for success in the airline industry Continental employs CallMinder systems to
Monitor calls and keystrokes Data mine keystrokes and voice calls

This technology resulted in

Fewer calls going to the help desk Higher customer satisfaction Reduction of flight confirmation calls Cost savings in excess of $1 million
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Case Questions
What are the business benefits of the CallMiner system? How can new technologies like CallMiner help companies improve their customer service and gain a competitive edge in the marketplace? Andre Harris refers to calls to reconfirm a flight as quite frankly, low-value calls. Why are they classified as low value? Why do you think so many customers are placing such calls?
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