ITM 100 Notes
Chapter 1 pg. 6-27
Information System: is an organized collection of people, information, business processes,
and information technology, designed to transform inputs into outputs, in order to achieve a
Moores Law: Refers to the advancement of technology. It means that performance is
improving (faster processors, better resolution, touch screens), and cost is decreasing.
Information System Components:
Input> Process > Output: Items entered into a system to transfer them into
outputs; steps taken to complete transformation; the end result.
Data> Information > knowledge: Raw unorganized facts; data
processed/organized/transformed into something more useful; Information/ human
experience and judgment.
Information technology: the physical components (typically software, hardware,
and connectivity) that make up the IT portion of an IS. Technology is an enabler for
process the steps they were designed to accomplish.
Business processes: Steps that interact with each other to turn inputs into desired
People or organizations: have the ability to influence Information system.
Decision: A choice made to avoid or follow some course of action.
Business Value: A positive return on the investment of a input, process, output.
The productivity zone: Occurs at the intersection of people, processes, and technology. A
successful IS system integrates all three of these components to create business value.
www.notesolution.com Types of IS found in increasing business value:
TPS (Transaction processing system): Captures and processes transactions to
make them available to the organization.
MIS (Management information system): Through processing and reporting
features, an MIS provides timely information to decision makers. Makes reports and
DSS (Decision support system): Provides analytical and visualization tools to
support and enhance decision making and planning. Helps managers make data-
ERP (Enterprise resource planning): Integrates and standardizes processes and
centralizes and standardizes the storage and management data. Reduces
duplications of processes and effort.
CRM (Customer Relationship Management): Builds customer portfolios to
Chapter 3 pg. 87-98
Michel Porters five forces model: Porter suggests that the intensity of competitors in an
industry can be attributed to forces that define the industry. If the industry is attractive,
there are few barriers to entry and more competitors enter the industry, thereby increasing
competition. If there are barriers to entry, then fewer competitors will enter. Similarly,
consider the threat of consumers substituting a new product of service for existing ones, and
the bargaining power of both suppliers and buyers to create and sustain competitive
Open System Model: Indicates that a business operates by transforming inputs into
outputs and by constantly interacting with its environment. Significant components of the
business environment are:
Stakeholders have a profound effect on organizations. A stakeholder is a person or
entity that has an interest in and an influence on how a business will function in
order to succeed. A stakeholder may be external (in the environment) or internal
(within the organizational boundary) relative to the system.
www.notesolution.com Organizational Boundary: Businesses must remain open to receive inputs and to
produce outputs from their environment. Further, the business must be aware of
whats going on in the environment, in order to remain competitive by reacting to
threats and opportunities.
How business Organize to Create Value:
Functional: The lines of authority and communication are vertically oriented.
o PRO: Clear chain of authority and communications within a function.
o PRO: Significant technical expertise found in the functional areas.
o PRO: Efficient use of resources.
o CON: Poor communication and coordination between different functional
o CON: Inflexible and slow to respond.
o CON employees may focus on functional area goals rather than
Decentralized: The lines of authority and communication are vertically oriented.
o PRO: Fast response, greater flexibility.
o PRO: Greater communication and organization between different units.
o PRO: Greater development of breadth of managerial skills.
o CON: Duplication of resources and efforts across organizational units.
o CON: technical knowledge not as in depth relative to functional teams.
o CON: Less direct control by upper management.
Matrix: Blends the functional and decentralized structures. From top to bottom, the
matrix is organized as a functional structure. From left to right, the matrix follows a
product-focused structure that creates teams across business units.
o PRO: Increased flexibility and responsiveness to business needs and
o PRO: Enhanced problem solving, cooperation, communication, and resource
www.notesolution.com o PRO: Decision making occurs lower in organization and closer to customer.
o CON: Frustration due to dual lines of authority and responsibility.
o CON: Increased need for coordination between functional areas.
o CON: Potential for goal conflict between functional and decentralized
Business Process: a collection of activities that takes one or more kinds of input and
creates an output that is of value to the customer.
IGOE (Inputs, Guides, Outputs, Enablers):
o Inputs are resources needed to start a process.
o Guides are rules or policies within which a process must operate.
o Outputs are the results of a process.
o Enablers are a special kind of input or resource that facilitates a process.
BPR: Business process reengineering: is the study of business processes to find
ways of making them more efficient. Goal of BPR is to reduce cost, increase
throughput and speed, and increase quality and service. BPR helps businesses gain
Competitive advantage= quality of insight+ speed of execution+ cost competitiveness.
Using Business Process to Create Business Value:
Automating: Using automation to execute repetitive, routine tasks without human
intervention. By automating you complete tasks with more speed, economy,
consistency, and accuracy.
Informating: recognizing that executing processes (customers accessing their bank
accounts to make deposits or withdraw funds) also creates new data and
information. Ex. Tracking inventory to see which products are most popular.
Transforming: use IT to help acquire or maintain a competitive advantage over or in
line with their competitors. Ex. UPS and online package tracking options.