Fundamentals of Information

Systems, Sixth Edition

Chapter 1
An Introduction to Information Systems
in Organizations

Principles and Learning Objectives

The value of information is directly linked to how it
helps decision makers achieve the organizations
goals
Distinguish data from information and describe the
characteristics used to evaluate the quality of data

Fundamentals of Information Systems, Sixth Edition

Principles and Learning Objectives

(continued)
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
Identify the basic types of business information
systems and discuss who uses them, how they are
used, and what kinds of benefits they deliver

Fundamentals of Information Systems, Sixth Edition

Principles and Learning Objectives

(continued)
System users, business managers, and information
systems professionals must work together to build
a successful information system
Identify the major steps of the systems development
process and state the goal of each

Fundamentals of Information Systems, Sixth Edition

Principles and Learning Objectives

(continued)
The use of information systems to add value to the
organization can also give an organization a
competitive advantage
Identify the value-added processes in the supply
chain and describe the role of information systems
within them
Identify some of the strategies employed to lower
costs or improve service
Define the term competitive advantage and discuss
how organizations are using information systems to
gain such an advantage
Fundamentals of Information Systems, Sixth Edition

Principles and Learning Objectives

(continued)
IS personnel is a key to unlocking the potential of
any new or modified system
Define the types of roles, functions, and careers
available in information systems

Fundamentals of Information Systems, Sixth Edition

Why Learn About Information Systems

in Organizations?
Information systems used by:
Sales representatives
Managers
Financial advisors

Information systems:
Indispensable tools to help you achieve your career
goals

Fundamentals of Information Systems, Sixth Edition

Introduction
Information system (IS):
A set of interrelated components that collect,
manipulate, and disseminate data and information
and provide feedback to meet an objective

Businesses:
Can use information systems to increase revenues
and reduce costs

Fundamentals of Information Systems, Sixth Edition

Information Concepts
Information:
One of an organizations most valuable resources
Often confused with the term data

Fundamentals of Information Systems, Sixth Edition

Data, Information, and Knowledge

Data:
Raw facts

Information:
Collection of facts organized in such a way that they
have value beyond the facts themselves

Process:
Set of logically related tasks

Knowledge:
Awareness and understanding of a set of information

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10

Data, Information, and Knowledge

(continued)

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11

Data, Information, and Knowledge

(continued)

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12

Data, Information, and Knowledge

(continued)

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13

The Characteristics of Valuable

Information
If an organizations information is not accurate or
complete:
People can make poor decisions, costing thousands,
or even millions, of dollars

Depending on the type of data you need:

Some characteristics become more important than
others

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Fundamentals of Information Systems, Sixth Edition

15

The Value of Information

Directly linked to how it helps decision makers
achieve their organizations goals
Valuable information:
Can help people and their organizations perform
tasks more efficiently and effectively

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16

What is an Information System?

Information system (IS) is a set of interrelated
elements that:

Collect (input)
Manipulate (process)
Store
Disseminate (output) data and information
Provide a corrective reaction (feedback mechanism)
to meet an objective

Fundamentals of Information Systems, Sixth Edition

17

What is an Information System?

(continued)

Fundamentals of Information Systems, Sixth Edition

18

Input, Processing, Output, Feedback

Input:
Activity of gathering and capturing raw data

Processing:
Converting data into useful outputs

Output:
Production of useful information, usually in the form
of documents and reports

Feedback:
Information from the system that is used to make
changes to input or processing activities
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19

Manual and Computerized Information

Systems
An information system can be:
Manual or computerized

Example:
Investment analysts manually draw charts and trend
lines to assist them in making investment decisions

Computerized information systems:

Follow stock indexes and markets and suggest when
large blocks of stocks should be purchased or sold

Fundamentals of Information Systems, Sixth Edition

20

Computer-Based Information Systems

Single set of hardware, software, databases,
telecommunications, people, and procedures:
That are configured to collect, manipulate, store, and
process data into information

Technology infrastructure:
Includes all hardware, software, databases,
telecommunications, people, and procedures
Configured to collect, manipulate, store, and process
data into information

Fundamentals of Information Systems, Sixth Edition

21

Computer-Based Information Systems

(continued)

Fundamentals of Information Systems, Sixth Edition

22

Computer-Based Information Systems

(continued)
Hardware:
Consists of computer equipment used to perform
input, processing, and output activities

Software:
Consists of the computer programs that govern the
operation of the computer

Database:
Organized collection of facts and information,
typically consisting of two or more related data files

Fundamentals of Information Systems, Sixth Edition

23

Computer-Based Information Systems

(continued)
Telecommunications, networks, and the Internet:
The electronic transmission of signals for
communications

Networks:
Connect computers and equipment to enable
electronic communication

Internet:
Worlds largest computer network, consisting of
thousands of interconnected networks, all freely
exchanging information
Fundamentals of Information Systems, Sixth Edition

24

Computer-Based Information Systems

(continued)
Intranet:
Internal network that allows people within an
organization to exchange information and work on
projects

Extranet:
Network that allows selected outsiders, such as
business partners and customers, to access
authorized resources of a companys intranet

Fundamentals of Information Systems, Sixth Edition

25

Computer-Based Information Systems

(continued)
People:
The most important element in most computerbased information systems

Procedures:
Include strategies, policies, methods, and rules for
using the CBIS

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26

Business Information Systems

Most common types of information systems:
Those designed for electronic and mobile
commerce, transaction processing, management
information, and decision support

Some organizations employ:

Special-purpose systems, such as virtual reality, that
not every organization uses

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27

Business Information Systems

(continued)

Fundamentals of Information Systems, Sixth Edition

28

Business Information Systems

(continued)

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29

Electronic and Mobile Commerce

E-commerce:
Any business transaction executed electronically
between:
Companies (business-to-business, B2B)
Companies and consumers (business-to-consumer,
B2C)
Consumers and other consumers (consumer-toconsumer, C2C)
Business and the public sector
Consumers and the public sector

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30

Electronic and Mobile Commerce

(continued)
Mobile commerce (m-commerce):
The use of mobile, wireless devices to place orders
and conduct business

E-commerce:
Can enhance a companys stock prices and market
value

Electronic business (e-business):

Uses information systems and the Internet to
perform all business-related tasks and functions

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Electronic and Mobile Commerce

(continued)

Fundamentals of Information Systems, Sixth Edition

32

Enterprise Systems: Transaction

Processing Systems and Enterprise
Resource Planning
Transaction:
Any business-related exchange, such as payments
to employees and sales to customers

Transaction processing system (TPS):

Organized collection of people, procedures,
software, databases, and devices used to record
completed business transactions

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Enterprise Systems: Transaction

Processing Systems and Enterprise
Resource Planning (continued)

Fundamentals of Information Systems, Sixth Edition

34

Enterprise Systems: Transaction

Processing Systems and Enterprise
Resource Planning (continued)
Enterprise resource planning:
Set of integrated programs that manages the vital
business operations for an entire multisite, global
organization

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35

Information and Decision Support

Systems
Management information system (MIS):
Organized collection of people, procedures,
software, databases, and devices that provides
routine information to managers and decision
makers

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36

Information and Decision Support

Systems (continued)

Fundamentals of Information Systems, Sixth Edition

37

Information and Decision Support

Systems (continued)
Decision support system (DSS):
Organized collection of people, procedures, software,
databases, and devices that support problem-specific
decision making
Can include:
A collection of models used to support a decision maker
or user (model base)
A collection of facts and information to assist in decision
making (database)
Systems and procedures (user interface or dialogue
manager) that help decision makers and other users
interact with the DSS
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Information and Decision Support

Systems (continued)

Fundamentals of Information Systems, Sixth Edition

39

Specialized Business Information

Systems: Knowledge Management,
Artificial Intelligence, Expert Systems,
and Virtual Reality
Knowledge management systems (KMSs):
Organized collection of people, procedures,
software, databases, and devices to:
Create, store, share, and use the organizations
knowledge and experience

Artificial intelligence (AI):

Computer system takes on characteristics of human
intelligence

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Specialized Business Information

Systems (continued)

Fundamentals of Information Systems, Sixth Edition

41

Specialized Business Information

Systems (continued)
Expert systems:
Give computer ability to make suggestions and
function like an expert in a particular field

Virtual reality and multimedia:

Virtual reality:
Simulation of a real or imagined environment that can
be experienced visually in three dimensions

Multimedia:
Can include photos and images, the manipulation of
sound, and special 3D effects
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42

Systems Development
Systems development:
The activity of creating or modifying existing
business systems

Outsourcing:
Allows a company to focus on what it does best and
delegate other functions to companies with expertise
in systems development

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Systems Development (continued)

Fundamentals of Information Systems, Sixth Edition

44

Systems Investigation and Analysis

Goal of systems investigation:
To gain clear understanding of the problem to be
solved or opportunity to be addressed

Systems analysis:
Defines the problems and opportunities of the
existing system

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45

Systems Design, Implementation, and

Maintenance and Review
Systems design:
Determines how new system will work to meet
business needs defined during systems analysis

Systems implementation:
Acquiring various system components defined in
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
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46

Organizations and Information

Systems
Organization:
Formal collection of people and other resources
established to accomplish a set of goals
A system
Constantly uses money, people, materials, machines
and other equipment, data, information, and
decisions

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Organizations and Information

Systems (continued)

Fundamentals of Information Systems, Sixth Edition

48

Organizations and Information

Systems (continued)
Value chain:
Series (chain) of activities that includes inbound
logistics and warehouse and storage

Supply chain management (SCM):

Determines:
What supplies are required for value chain
What quantities are needed to meet customer demand
How supplies should be processed into finished goods
and services
How shipment of supplies and products to customers
should be scheduled, monitored, and controlled
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Organizations and Information

Systems (continued)

Fundamentals of Information Systems, Sixth Edition

50

Organizations and Information

Systems (continued)
Customer relationship management (CRM)
programs:
Help companies manage all aspects of customer
encounters
Can get customer feedback to help design new
products and services

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Organizational Culture and Change

Culture:
Set of major understandings and assumptions
shared by a group

Organizational culture:
Major understandings and assumptions
Influences information systems

Organizational change:
How organizations plan for, implement, and handle
change

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User Satisfaction and Technology

Acceptance
Technology acceptance model (TAM):
Specifies the factors that can lead to better attitudes
about the information system

Technology diffusion:
Measure of how widely technology is spread
throughout an organization

Technology infusion:
Extent to which technology permeates a department

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User Satisfaction and Technology

Acceptance (continued)

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Competitive Advantage
Significant and (ideally) long-term benefit to a
company over its competition
Can result in higher-quality products, better
customer service, and lower costs

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55

Factors That Lead Firms to Seek

Competitive Advantage
The five-forces model:

Rivalry among existing competitors

Threat of new entrants
Threat of substitute products and services
Bargaining power of buyers
Bargaining power of suppliers

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Strategic Planning for Competitive

Advantage
Strategies:

Cost leadership
Differentiation
Niche strategy
Altering the industry structure
Creating new products and services
Improving existing product lines and service

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Strategic Planning for Competitive

Advantage (continued)
Other strategies:

Growth in sales
First to market
Customizing products and services
Hiring the best people
Innovation

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Performance-Based Information
Systems
Major stages in the use of information systems:
Cost reduction and productivity
Competitive advantage
Performance-based management

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Productivity
A measure of output achieved divided by input
required
Higher level of output for a given level of input
means greater productivity
Lower level of output for a given level of input
means lower productivity
Productivity = (Output / Input) 100%

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61

Return on Investment and the Value of

Information Systems
Return on investment (ROI):
One measure of IS value
Investigates the additional profits or benefits that are
generated as a percentage of the investment in IS
technology

Earnings growth:
The increase in profit that the system brings

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Return on Investment and the Value of

Information Systems (continued)
Market share and speed to market:
The percentage of sales that a product or service
has in relation to the total market

Customer awareness and satisfaction:

Performance measurement is based on feedback
from internal and external users

Total cost of ownership:

The sum of all costs over the life of the information
system

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Risk
Managers must consider the risks of designing,
developing, and implementing systems
Information systems can sometimes be costly
failures

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Careers in Information Systems

Degree programs:
Information systems
Computer information systems
Management information systems

U.S. Department of Labors Bureau of Labor

Statistics (www.bls.gov):
Predicts that many technology jobs will increase
through 2012 or beyond

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Roles, Functions, and Careers in IS

Primary responsibilities in information systems:
Operations:
System operators primarily run and maintain IS
equipment

Systems development:
Focuses on specific development projects and
ongoing maintenance and review

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Roles, Functions, and Careers in IS

Primary responsibilities in information systems
(continued):
Support:
Provides user assistance in hardware and software
acquisition and use, data administration, user training
and assistance, and Web administration

Information service units:

A miniature IS department attached and directly
reporting to a functional area in a large organization

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Typical IS Titles and Functions

Chief information officer (CIO):
Employs the IS departments equipment and
personnel to help the organization attain its goals

LAN administrators:
Set up and manage the network hardware, software,
and security processes

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Typical IS Titles and Functions

(continued)
Internet careers:

Internet strategists and administrators

Internet systems developers
Internet programmers
Internet or Web site operators

Certification:
Process for testing skills and knowledge resulting in
an endorsement by the certifying authority

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Other IS Careers
New and exciting careers have developed in
security and fraud detection and prevention
Other IS career opportunities include being
employed by technology companies, such as:
Microsoft (www.microsoft.com), Google
(www.google.com), Dell (www.dell.com), and many
others

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Working in Teams
It is always good for IS professionals to:
Have good communications skills and the ability to
work with other people

Getting the best team of IS personnel to work on

important projects is:
Critical in successfully developing new information
systems or modifying existing ones

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Finding a Job in IS
Developing an online rsum can be critical to
finding a good job
Job search approaches:
On campus visits
Referrals from professors, friends, and family
members
The Internet:

Online job sites

Company Web sites
Social networking sites
Blogs

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Global Challenges in Information

Systems

Cultural challenges
Language challenges
Time and distance challenges
Infrastructure challenges
Currency challenges

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Global Challenges in Information

Systems (continued)

Product and service challenges

Technology transfer issues
State, regional, and national laws
Trade agreements

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Summary
Data:
Raw facts

To be valuable, information must be:

Accurate, complete, economical to produce, flexible,
reliable, relevant, simple to understand, timely,
verifiable, accessible, and secure

Types of systems used within organizations:

E-commerce and m-commerce, TPS and ERP, MIS
and DSS, and specialized business information
systems
Fundamentals of Information Systems, Sixth Edition

75

Summary (continued)
Systems development:
The activity of creating or modifying existing
business systems

Organization:
Formal collection of people and various other
resources established to accomplish a set of goals

Information systems personnel typically work in an

IS department that employs:
A chief information officer, systems analysts,
computer programmers, and computer operators
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76