UNIT – FIRST

Foundations of
Information Systems
in Business

McGraw-Hill/Irwin ©2008,The McGraw-Hill Companies, All Rights Reserved

 Why study Information Systems and
Information Technology?
• Vital component of successful businesses
• Helps businesses expand and compete
• Businesses use IS and IT
– To improve efficiency and effectiveness of business
processes
– For managerial decision making
– For workgroup collaboration

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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

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 What is an Information System?

• An organized combination of
– People
– Hardware
– Software
– Communications networks
– Data resources
– Policies and procedures
• That stores, retrieves, transforms, and
disseminates information in an organization

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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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 TECHNOLOGIESINFORMATION
Computer base information systems & their use of the
following information tech.
• Computer Hardware tech., including microcomputers,
midsize servers, large main frame systems & I/O
storage device that support them.
• Computer software tech., including OS software , web
browsers

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IS Knowledge Framework for Business
Professionals

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 What should a Business Professional
know about IS?
• Foundation Concepts: fundamental behavioral,
technical, business and managerial concepts
• Information Technology: Hardware, software,
networks, data management and Internet-based
technology
• Business Applications: Major uses of the IS in the
organization
• Development Processes: How to plan, develop and
implement IS to meet business opportunities
• Management Challenges: The challenges of
effectively and ethically managing IT
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 Fundamental Roles of IS in Business

• Support of business processes and operations.

• Support of decision making by employees and
managers.
• Support of strategies for competitive advantage.

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What does IS do for a business?

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• Support Business Processes : As a consumer , you
regularly encounter information systems that support
the business processes and operations at the many
retail stores where you shop. Example : Customer
purchase record, keep track of inventory , pay
employees , evaluate sales trends etc.
• Support Decision Making : Information systems
also help store managers and other business
professionals make better decisions . Example:
Decisions on what lines of merchandise need to be
added or discontinued, or on what kind of
investment they require , are typically made after an
analysis provided by computer based information
systems
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• Support Competitive Advantage : Gaining a
strategic advantage over competitors requires
innovative application on information technologies.
Example: store management might make a
decision to install touch screen kiosks in all of their
stores , with links to their e-commerce website for
online shopping.
• Brand development and marketing effectiveness is
essential for a product which has a high level of
market acceptance which is evidently the case with
the low-cost carriers' route network strategy
outlined already
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Trends in Information Systems

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 What is E-business?

• The use of Internet technologies

– to work and empower business processes, electronic
commerce, and enterprise collaboration
– within a company and with its customers, suppliers, and
other business stakeholders.
• An online exchange of value.:- Exchange of inf. Money
resource and service any communication. These company
rely on e-business application , re-engg. internal business
process and implement e-commerce system with their
customer, suppliers, promote enterprise collaboration among
business terms and workgroup.

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How e-business is being used

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 E-business use

• Reengineer internal business processes

• Enterprise collaboration systems: support
communications, coordination and collaboration
among teams and work groups, e.g., virtual
teams
• Electronic commerce: buying, selling, marketing
and servicing of products and services over
computer networks

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Types of IS

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 Operations support systems

The role of a business firm’s operation support

system is to:-

– 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 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 electronic sensors
linked to computers to continually monitor chemical
processes make the control refinery process.
• Enterprise Collaboration Systems
– Enhance team and work group communications
– Examples: e-mail, videoconferencing

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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

When information system applications focus on-

• Provide information and support for effective
decision making by managers.
They are

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 Types of Management Support Systems

• 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)
– EIS it is a user friendly & interactive computer base system,
design to meet the information need of top Mgt
– Provide critical information for executives and managers
– Example: easy access to actions of competitors

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 Operational or Management 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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• Expert systems
– Collection of software packages & tools to
design, develop, implement, and maintain expert
systems for example- ATM, ROBOTICS etc.

• Advantage of expert system

• Easy to develop and modify
• The use of satisfying
• The use of heuristics
• Development by knowledge engineers and users
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 Classifications of IS by scope
• Functional business systems
– Focus on operational and managerial applications of basic
business functions
– Examples: support accounting, finance or marketing
• Strategic information systems
– Help get a strategic advantage over its customers
– Examples: shipment tracking, e-commerce web systems
• Cross-functional information systems
– Systems that are combinations of several types of information
systems
– Provide support for many functions

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 Challenges of IT Careers

• Outsourcing of basic programming to India, the

Middle-East and Asia-Pacific countries
• Strong employment opportunities in other areas
in IS
• Shortage of qualified IS personnel
• Long-term job outlook positive and exciting

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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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 Systems have three basic functions:
• Input involves capturing and assembling
elements that enter the system to be
processed . for exm. Raw material, energy, data
must be secured & organized for processing.
• Processing involves transformation process that
convert input into output. For exm.
Manufacturing process, human breathing
process.
• Output involves transferring elements that have
been produced by the transformation process to
their ultimate destination. For exm. Finished
products, human service.
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A business as a system

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Information systems model

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 Resource of an IS
• People Resources
– 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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