Chapter 1 Notes

Contents
Principles...............................................................................................................2
Defining an Information System............................................................................2
Manual and Computerised Information Systems...................................................3
Hardware............................................................................................................3
Software.............................................................................................................3
Databases...........................................................................................................3
Telecommunications, Networks, and the Internet..............................................4
People.................................................................................................................4
Procedures..........................................................................................................4
Business Information Systems...............................................................................4
Electronic and Mobile Commerce.......................................................................4
Transaction Processing Systems.........................................................................5
Enterprise Resource Planning.............................................................................5
Management Information Systems.....................................................................5
Decision Support System....................................................................................5
Specialised Business Information Systems.........................................................5
Systems Development...........................................................................................6
An introduction to organizations.........................................................................6
Value chain.........................................................................................................6
Organizational change...........................................................................................6
User Satisfaction and Technology Acceptance...................................................7
Competitive advantage..........................................................................................7
Evaluating IS.......................................................................................................7
Careers in Information Systems.............................................................................7
Summary...............................................................................................................8
Summary

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Principles

• The value of information is directly linked to how it helps decision makers

achieve the organization’s goals.
• 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.
• System users, business managers, and information systems professionals
must work together to build a successful information system.
• The use of information systems to add value to the organization is strongly
influenced by organizational structure, and the organization’s attitude and
ability to change.
• Cooperation between business managers and IS personnel is the key to
unlocking the potential of any new or modified system.

Defining an Information System

What is a system?
• A system is a set of elements or components that interact to accomplish
goals.
• Systems have inputs, processing mechanisms, outputs, and feedback
• A system processes the input to create the output
• Examples of systems are everywhere – an automatic car wash, the heating
in a building, the human body; you should be able to think of many more

What is information?
• Information is a collection of facts
• It can take many forms – text, numbers, images, audio clips and video
clips are all examples
• A closely related term is data

These two terms can be used interchangeably

Therefore…
• an information system (IS) is a set of interrelated components that
collect (input), manipulate & store (process), and disseminate (output)
information, and provide a feedback mechanism to meet an objective
• In information systems, input is the activity of gathering and capturing
data
• Processing means converting or transforming this input into useful
outputs
• Output involves producing useful information, usually in the form of
documents and reports
• Feedback is information from the system that is used to make changes to
input or processing activities

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The Characteristics of Valuable Information
To be useful to managers, information should have some or possibly all of the
following characteristics:

Accessible Accurate
Complete Economical
Flexible Relevant
Reliable Secure
Simple Timely
Verifiable

Manual and Computerised Information Systems

• An information system can be manual, for example paper-based, or
computerised
• A computer-based information system (CBIS) is a single set of
hardware, software, databases, telecommunications, people, and
procedures that are configured to collect, manipulate, store, and process
data into information

Hardware
• Hardware consists of computer equipment used to perform input,
processing, and output activities.
• Input devices include keyboards, mice and other pointing devices,
automatic scanning devices, and equipment that can read magnetic ink
characters.
• Processing devices include computer chips that contain the central
processing unit and main memory
• Output devices include computer screens and printers

Software
• Software consists of the computer programs that govern the operation of
the computer
• There are two types of software:
system software – this controls basic computer operations, including start-
up, and input and output. An example is Microsoft Windows.
applications software – applications allow you to accomplish specific tasks,
including word processing and drawing charts. An example is Microsoft
Excel.

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Databases
• A database is an organized collection of facts and information, typically
consisting of two or more related data files
• An organization’s database can contain information on customers,
employees, inventory, competitors’ sales, online purchases and much
more

Telecommunications, Networks, and the Internet

• Telecommunication is the electronic transmission of signals for
communications, which enables organizations to carry out their processes
and tasks through computer networks
• Networks connect computers and equipment in a building, around the
country, or around the world to enable electronic communication
• The Internet is the world’s largest computer network, actually consisting
of thousands of interconnected networks, all freely exchanging
information

People
• People are the most important element in most computer-based
information systems
• The people involved include users of the system and information systems
personnel, including all the people who manage, run, program, and
maintain the system

Procedures
• Procedures include the strategies, policies, methods, and rules for using
the CBIS, including the operation, maintenance, and security of the
computer
• Good procedures can help companies take advantage of new opportunities
and avoid potential disasters
• Poorly developed and inadequately implemented procedures can cause
people to waste their time or result in inadequate responses to disasters

Business Information Systems

• The most common types of information systems used in business
organizations are those designed for electronic and mobile commerce,
transaction processing, management information, and decision support
• These systems help employees in organizations accomplish routine and
special tasks
• They are often integrated in one product and delivered by the same
software package
• For example, some enterprise resource planning packages process
transactions, deliver information and support decisions

Electronic and Mobile Commerce

• E-commerce involves any business transaction executed electronically

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 • Some types of e-commerce are:
B2B (business-to-business) – commerce between companies
B2C (business-to-consumer, B2C) – commerce between companies and
consumers
C2C (consumer-to-consumer) – commerce between consumers and other
consumers
• B2B represents the major volume of e-commerce, and its fastest-growing
segment
• Mobile commerce (m-commerce) refers to transactions conducted
anywhere, anytime
• M-commerce relies on wireless communications that managers and
corporations use to place orders and conduct business with handheld
computers, portable phones, laptop computers connected to a network,
and other mobile devices.

Transaction Processing Systems

• A Transaction Processing System is an ‘Enterprise System’
• Enterprise systems help organizations perform and integrate important
tasks, such as paying employees and suppliers, controlling inventory,
sending out invoices, and ordering supplies
• A transaction processing system (TPS) is an organized collection of
people, procedures, software, databases, and devices used to record
completed business transactions
• A transaction is any business-related exchange such as payments to
employees, sales to customers, or payments to suppliers

Enterprise Resource Planning

• An enterprise resource planning (ERP) system is also an Enterprise
System
• It is a set of integrated programs that manage the vital business
operations for an entire multi-site, global organization
• The scope of an ERP system might vary from company to company,
however most ERP systems provide integrated software to support
manufacturing and finance
• They are used to schedule inventory purchases and the manufacturing
process, so that the right number of products are built at the right time, to
meet customer demand

Management Information Systems

• A management information system (MIS) is an organized collection of
people, procedures, software, databases, and devices that provides
routine information to managers and decision makers
• An MIS focuses on operational efficiency
• The output of a TPS is the input to a MIS

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 • MIS typically provide standard reports generated with data and
information from the TPS

Decision Support System

• A decision support system (DSS) is an organized collection of people,
procedures, software, databases, and devices that support problem-
specific decision making
• Decision support systems are used when the problem is complex and the
information needed to make the best decision is difficult to obtain and use
• Typically a company will have either separate TPS, MIS and DSS, or one
integrated ERP system, which does the work of the other three

Specialised Business Information Systems

• Knowledge management systems (KMS) are an organized collection of
people, procedures, software, databases, and devices to create, store,
share, and use the organization’s knowledge and experience
• Artificial Intelligence attempts to have the computer system take on
the characteristics of human intelligence. Applications include robotics and
natural language processing
• Virtual reality is the simulation of a real or imagined environment that
can be experienced visually in three dimensions

Systems Development
• Systems development is the activity of creating or modifying business
systems. The main stages are as follows:
• Systems investigation, where a clear understanding of the problem to
be solved is developed
• Systems analysis, where the problems and opportunities of the existing
system are defined
• Systems design, which determines how the new system will work to
meet the business needs defined during systems analysis
• Systems implementation, which involves creating or acquiring the
various system components (hardware, software, databases, etc.) defined
in the design step, assembling them, and putting the new system into
operation
• Systems maintenance and review checks and modifies the system so
that it continues to meet changing business needs

An introduction to organizations
• An organization is a formal collection of people and other resources
established to accomplish a set of goals
• An organization is a system, which means that it has inputs, processing
mechanisms, outputs, and feedback
• Resources such as materials, people, and money are the inputs
• These go through a transformation mechanism, the processing

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 • The outputs from the transformation mechanism are usually goods or
services, which are of higher relative value than the inputs alone
• Through adding value or worth, organizations attempt to achieve their
goals

Value chain
• The value chain is a useful tool for analysing where and how this value
gets added
• The value chain is a series (chain) of activities that includes inbound
logistics, warehouse and storage, production, finished product storage,
outbound logistics, marketing and sales, and customer service
• The value chain is used to examine what happens to raw material to add
value to them before the finished product gets sold to customers
• Information systems can be developed to focus on those activities that
add the most value

Organizational change
• Most organizations are constantly undergoing change, both minor and
major
• The need for organizational change can come from new managers, staff
leaving, activities wrought by competitors or stockholders, new laws,
natural occurrences (such as a hurricane), and changes in general
economic conditions
• An new IS will cause change
• When a company introduces a new information system, a few members of
the organization must become agents of change - champions of the new
system and its benefits
• Understanding the dynamics of change can help them confront and
overcome resistance so that the new system can be used to maximum
efficiency and effectiveness

User Satisfaction and Technology Acceptance

• To be effective, reengineering and continuous improvement efforts must
result in satisfied users and be accepted and used throughout the
organization
• Technology diffusion is a measure of how widely technology is spread
throughout an organization. An organization in which computers and
information systems are located in most departments and areas has a
high level of technology diffusion
• Technology infusion is the extent to which technology permeates an
area or department. In other words, it is a measure of how deeply
embedded technology is in an area of the organization
• An organization might have a high level of diffusion and infusion, but this
does not necessarily mean that information systems are being used to
their full potential

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Competitive advantage
• A competitive advantage is the ability of a firm to outperform its
industry, that is, to earn a high rate of profit than the industry norm
• It can result from higher-quality products, better customer service, and
lower costs
• Often, a competitive advantage will depend on a carefully designed
information system

Evaluating IS
• Once an information system has been implemented, management will
want to assess how successful it has been in achieving its goals. Often this
is a difficult thing to do, and many businesses do not attempt to take
anything more than an informal approach to evaluation
• Some approaches to evaluating IS include:
• Productivity – examine how output has changed since implementation
• Return on Investment – examine how profits have increased
• Earnings Growth – another measure of profit increase
• Market Share – examine the change in market share since
implementation
• Customer Awareness and Satisfaction – possibly qualitative measure
of satisfaction
• Total Cost of Ownership – estimate the total cost of the IS breaking cost
into areas such as the cost to acquire the technology, technical support,
administrative costs, and end-user operations

Careers in Information Systems

• Chief Information Officer
• LAN Administrators
• Internet Careers - Web operations, Web development, and Web
administration
• System developers
• Technical writing
• User interface design
• Database administration

Summary
• 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 an information system: input, processing, output, and
feedback

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• 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
• Management information system (MIS): an organized collection of people,
procedures, software, databases, and devices that provides 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: creating or modifying existing business systems
• An organization is a system - has inputs, processing mechanisms, outputs,
and feedback
• A competitive advantage is the ability of a firm to outperform its industry,
that is, to earn a high rate of profit than the industry norm
• Evaluating IS is a difficult thing to do, and many businesses do not
attempt to take anything more than an informal approach to evaluation
• Typical IS titles: Chief Information Officer (CIO), LAN administrators,
Internet strategists and administrators, Internet systems developers,
Internet programmers, and Internet or Web site operators

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