BUS237- Tingling- Information Systems in Business
Chapter 1 Information Systems and You
What is an Information System?
information system: a group of components that interact to produce information
computer hardware: the physical hardware such as storage
disks, keyboards, etc.
software: computer components that were not hardware;
programs or applications
o a.k.a. computer-based information system
What is MIS?
MIS or Management Information Systems: the development and use of information
systems that help businesses achieve their goals and objectives
Development and use of information systems
o To have an IS that meets yours needs, you need to take an active role in that
Achieving Business Goals and Objectives
o Businesses themselves don’t “do” anything
o IS are created for a purpose
How Does IS Differ from IT
Information technology (IT): refers to methods, inventions, standards, and products
IT is raw technology and is embedded into IS
It by itself will not help an organization achieve its goals and objectives
How important are IS to Our Economy
Information and Communications Technologies (ICT) sect: industry sector most closely
related to the use of information systems in Canada
Industry provides products and services that other industries, such as retail,
manufacturing, insurance, or banking, rely on to get their work done
Jobs, workers in the ICT industry rising
How Do Successful Business Professionals Use IS
Business professionals use numerous information systems
Project management software, collaborative systems, etc. Business professionals need to consider IT and IS when they think about the problems
and opportunities that confront a department or organization
What is the Shape of Things to Come?
Moore’s Law: predicts that the number of transistors on a computer chop would double
roughly every two years
o One of few predictions in the area of IT that has really stood the test of time
IT is difficult to predict because it is all about innovation
o Innovation brings unexpected results
o How business professionals handle data and communication
o When and how advertises allocate money
What Is This Class About?
Learning to use tools such as Excel or Access to accomplish a business goal
Learn about hardware, software, content, and databases
How technology can be used to gain a competitive advantage
How IT departments how
Relationship of business processes and information systems
Chapter 2 Business Processes, Information, and Decision Making
“How Did This Stuff Get Here?”
Different processes successfully interacted to create/ get you stuff
Activity comes about through the interaction of business processes
Understanding business processes is critical to understanding the information systems
that support them
Business processes are central to what every organization does
What Is a Business Process?
Business process: a network of activities, resources, facilities, and information that
interact to achieve some business objective
o Examples: inventory-management processes, manufacturing processes, sales
Also sometimes referred to as a business system
Purchase order: lists the items orders and the quantity desired
What Are the Components of a Business Process?
Activities: transform resources and information of one type into resources and
information of another type. o Can consist or be made up of strictly manual activities, be automated or
controlled by computers or be a combo of manual and automated activities.
Resources: items of values
o Milk, a working person, cash, etc.
Facilities: structures used within the business process
o Inventories, databases, factories, equipment, trucks, etc.
Information: the fourth element in the business process, used in activities to determine
how to transform the inputs they receive into the outputs they produce
Business Process Modeling Notation: a standard set of terms and graphical notations for
documenting business processes
What is Information?
Information: knowledge derived from data;
o Data: recorded facts or figures
o Information is data presented with meaning
o Or sometimes defined as processed data
o A difference that makes a difference
Characteristics of Good Information
Based on correct and complete data
Produced in time for its intended use
Both to the context and to the subject
o Just Barely Sufficient
Enough for the purpose for which it is generated
Know what information to discard/ what is excess
o Worth Its Cost
Appropriate cost for its value
What Is the Role of Information in Business Processes?
Information is important
o Lets us know when we need to make payments for goods or services received
o Helps us keep track of what we have delivered and what has not been delivered
Keeps inventory up to date
o Also beyond accounting: manage business processes
Business Process Management (BPM)
o BPM: a field of management that promotes the development of effective and
efficient processes through continuous
Integrating information technology into the business process.
Total Quality Management (TQM)
Lean Production Information about the process provides the ability to better manage the
The better you are able to understand business processes, the better
you will be able to successfully mange the process
How Do Information Systems Support Business Processes?
IS are used by the activities in a business process
Sometimes several activities use one information system
What Does It Mean to Automate a Process Activity?
o Automated system: work formerly done by people is now done by computers
o Automation: Human Side Computer Side
Actors: Hardware, People
Computer Side: Hardware, Software
Instructions: Software, Procedures
Human Side: Procedures, People
An Information System to Support Counter Sales
o Receives the customer’s payment, takes customers order, takes the items from
o Cashiers require less training because of this information system
An Information System to Support Payment
o Payment generates an authorization and sends it to someone else, who cuts the
o Manual system: the information system that supports the payment activity
Manual because there are many different exceptions
An Information System to Support Purchasing
o Balances the work between automation and manual activity
o Counter sales, payments and purchasing
How Do Information Systems support Decision Making?
Making decisions is central to managing organizations
Decisions Vary by Level
o Operational decisions: concern day to day activities
Ex: How many widgets should we order from vendor A? Should we
extend credit to vendor B? What invoices should we pay today?
Transaction processing systems (TPS): information systems that support
operational decision making
o Managerial decisions: concern the allocation and utilization of resources
How much should we budget for computer hardware and
programs for department A next year?
Show many engineers should we assign to project B?
Management information systems (MIS): information systems that
support managerial decision making
MIS can be used in TWO ways: broadly- to mean the subjects
in this entire book, or narrowly- to mean information systems
that support managerial decision making o Strategic decisions: concern broader organizational issues
Should we start a new product line?
Should we open a centralized warehouse in Calgary?
Should we acquire company A?
Executive information systems (EIS): information systems that support
strategic decision making
o Operational: short term (this week, next week)
o Managerial: longer time frames (next quarter, next year)
o Strategic: long term (not realized for years)
Decisions Vary by Structure
o Structured decisions: one for which there is an understood and accepted
method for making the decision
A standard method for allocating furniture
A formula for computing the reorder quantity of an item in
o Unstructured decisions: one for which there is no agreed upon decision making
Assessing how well suited an employee is for performing a
Predicting the future direction of the econing or the stock
Supporting Decision Making
o Intelligence gathering: the stage in which decision makers determine what is to
be decided, what the criteria for the decision will be, and what date is available
o Alternatives formulation: the stage in which decision makers lay out various
o Choice: when the decision makers analyze choices against criteria using data
o Implementation: the stage in which they “make it so!” or implement their
o Review: the step during which decision makers evaluate the results of the
decision, and if necessary, repeat process to correct and adapt
What Is Your Role?
You are part of every information system you use
Chapter 3 Strategy, Information Systems, and Competitive Advantage
What Is the Productivity Paradox?
The Productivity Paradox: The lack of evidence of an increase in worker productivity
associated with the massive increase in investment in information technology
o Productivity: how IT can be used to created business value Business value: tangible benefits for organizations through either more
efficient use of resources or more effective delivery of their services to
Can Information Systems Improve Productivity?
Efficiency: means that business processes can be accomplished either more quickly or
with fewer resources, facilities and information to accomplish activities
Effectiveness: “doing the right things”
Value chain: a network of activities that improve the effectiveness (or value) of a good
Margin: the difference between the price the customer is willing to pay and the cost the
company incurs in moving the goods or services through the value chain
Primary activities: activities in which value is added directly to the product
Support activities: activities which do not add value directly to the product, but support
How are Organizational Strategy and Industry Structure Related?
A company’s information systems strategy should support, or be aligned with, the
overall company strategy.
Organizational strategy begins with an assessment of the fundamental characteristics
and structure of an industry.
One model used to assess an industry structure is Porter’s Five Forces Model. The five
forces determine industry profitability:
o Bargaining power of customers
o Threat of new entrants
o Rivalry among existing firms
o Threat of substitutions
o Bargaining power of suppliers
Competitive strategy: the strategy an organization chooses as the way it will succeed in
its industry. According to Porter, there are four fundamental competitive strategies: cost
leadership across an industry or within a particular industry segment, and product
differentiation across an industry or within a particular industry segment
In order to be effective, the organization’s goals, objectives, culture, and activities must
be consistent with the organization’s strategy
What is the Relationship between Innovation and Information Technology?
Sustaining technologies: changes in technology that maintain the rate of improvement in
Disruptive technologies: introduce a very new package of attributes to the accepted
Diffusion of innovation: defined by Everett Rogers as “process by which an innovation is
communicated through certain channels over time among the members of a social
o Implementation o Confirmation
How Do Information Systems Provide Competitive Advantage?
Organizations gain a competitive advantage by creating new products or services, by
enhancing existing products or services, and by differentiating their products and
services from those of their competitors
Principles of competitive advantage:
o Product Implementations:
Create a new product or service
Enhance products or services
Differentiate products or services
o System Implementations:
Lock in customers and buyers
Lock in suppliers
Raise barriers to market entry
Switching costs: locking in customers by making it difficult or expensive for them to
switch to another product
Can Competitive Advantage through Information Systems Be Sustained?
Sustained competitive advantage: the development of people and procedures that are
well supported by the underlying technology
Chapter 4 Hardware and Software
Why Do You Need to Know about Information Technology?
When considering technology and how we use it, it is important to understand not only
where we are, but also where we have come from
Knowing a small bit about information technology, including hardware and software,
makes us more knowledgeable consumers of technology
Where Did All This Information Technology Stuff Come From?
The history of information technology is rich and recent.
Early Computers: 1939-1952
o First patent on a digital computer was filed by Presper Eckert and John
Mauchly, who developed the ENIAC computer
o Early computers were expensive and complex
o The first commercial digital computers were large, room-sized devices called
Were mainly used by business and government
o First generation mainframes were based on now obsolete vacuum tube
technology o Second generation were smaller, easier to maintain, and more reliable
o Third generation included operating systems and multiprocessing
o Mainframes are designed for fast processing and massive storage and for this
reason they are likely to continue to be used far into the future as our need for
information continues to grow.
o Microcomputers used microprocessors as a critical piece in its development
People wanted something smaller
Early microcomputers, often had no display screen or monitor
Later, as hardware technology developed, companies such as Microsoft
wrote programming languages (BASIC) and operating systems (DOS)
that could be used
These had monitors, keyboards, portable floppy disks, word
processors, spreadsheets and other software
Were largely stand-alone
Sharing data across two computers required saving data on a
“floppy” drive and transferring the drive to another machine
Networking Personal Computers: 1985-Present
o Local Area Network (LAN)
Allowed the connection of many personal computers together
o Wide Area Network (WAN)
o Price and performance advances
o Small is powerful
o The network is a thing
What Does a Manager Need to Know about Computer Hardware?
Hardware: consists of electronic components and related gadgetry that input, process,
output and store data according to instructions encoded in computer programs or
o CPU and data bus
o Main memory
o Magnetic disk
o Optical disk—CD
o Optical disk—Disk
Input hardware devices: includes the keyboard, mouse, document scanners, and barcode
Central processing unit (CPU): sometimes called the “brain” of the computer
o The machine’s “smarts”
o Vary in speed, function, and cost
o Works in conjunction with the computer’s main memory
Main memory: a set of cells in which each cell holds a byte of data or instruction; each
cell has an address, and the CPU uses the addresses to identify particular date items
o Stores computations from the CPU Special function cards: cards that can be added to the computer to augment the
computer’s basic capabilities
Output hardware: consists of video displays, printers, audio speakers, overhead
projectors, and other special-purpose devices, such as large flatbed plotters
Storage hardware: saves data and programs
o Magnetic disks arenh7 far the most common
o Optical disks such as CDs and DVDs are also popular
o “Flash” memory (USB-universal serial bus)
Computers represent data using binary digits, called bits.
o A bit is either a zero or a one
o Open switch=0, closed=1
Bytes: 8 bits
Kilobytes (K): 1024 bytes
Megabyte (MB): 1024K
Gigabyte (GB): 1024MB
Terabyte (TB): 1024GB
Data channel or bus: means by which the CPU reads instructions and data from main
memory and writes data to main memory
Cache: a small amount of very fast memory
Operating system: a program that controls the computer’s resources as well as a block
Memory swapping: the movement of programs and data into and out of memory. If a
computer has insufficient memory for its workload, such swapping will degrade system
Volatile: the cache and main memory are volatile; meaning their contents are lost when
power is off
Non-volatile: magnetic disks and optical disks are non—volatile; meaning their contents
survive when power is off
Hertz: cycles used to express CPU speed.
What Is the Difference between a Client and a Server, and What is Cloud Computing?
Client: a computer that provides word processing, spreadsheets, database access, and
usually a network connection
Servers: a computer that provides some type of service, such as hosting a database,
running a blog, publishing a website, or selling foods. Server computers are faster,
larger, and more powerful than client computer
Server farm: a large collection of server computers that coordinates the activities of the
servers, usually for commercial purposes
Cloud computing: the concept of servers that supply applications and data. Customers
do not necessarily own the computer they use, instead hardware, software and
applications are provided as a service, usually through a web browser
Grid computing: several computers are used to address a single problem at the same
time. Grid computing uses software to divide and apportion pieces of a program among
several computers, sometimes many thousands
What Does a Manager Need to Know about Software? Instruction set: the collection of instructions that a computer can benefit a process
Four Major Operating Systems:
o Windows: most important operating system for business users
o Mac OS: Apple developed operating system; easy to use interfaces
o Unix: has been the workhorse of the scientific and engineering communities;
generally regarded as being more difficult
o Linux: a version of Unix