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Lecture # 01
Chapter 1 An Introduction to Information Systems in Organizations
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
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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
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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
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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
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Information systems personnel are the key to unlocking the potential of any new or modified system
Define the types of roles, functions, and careers available in information systems
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Information systems (ISs) can cut costs and increase profits Students in most fields need to know ISs
Management major might be hired to design a system to improve productivity Biochemistry major might be hired to conduct drug research using computer techniques
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Information system (IS)
Set of interrelated components: collect, manipulate, store, and disseminate data and information Provides feedback to meet an objective Examples: ATMs, airline reservation systems, course reservation systems
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Data: raw facts
Alphanumeric, image, audio, and video
Information: collection of facts organized in such a way that they have additional value beyond the value of the facts themselves Knowledge: The awareness and understanding of a set of information and the ways it can be used.
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(1) Distinct pieces of information, usually formatted in a special way. All software is divided into two general categories: data and programs. Programs are collections of instructions for manipulating data. Data can exist in a variety of forms- as numbers or text on pieces of paper, as bits and bytes stored in electronic memory, or as facts stored in a person's mind. Strictly speaking, data is the plural of datum, a single piece of information. In practice, however, people use data as both the singular and plural form of the word. (2) The term data is often used to distinguish binary machine-readable information from textual human-readable information. For example, some applications make a distinction between data files (files that contain binary data) and text files (files that contain ASCII data).
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(3) In database management systems, data files are the files that store the database information, whereas other files, such as index files and data dictionaries, store administrative information, known as metadata.
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Process
A set of logically related tasks performed to achieve a defined outcome
Process
(n) An executing program. The term is used loosely as a synonym of task. (v) To perform some useful operations on data.
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Knowledge
An awareness and understanding of a set of information and how that information can be made useful to support a specific task
Knowledge base
The collection of data, rules, procedures, and relationships that must be followed to achieve value or the proper outcome
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Table 1.1: Types of Data
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Data, Information, and Knowledge (continued)
Figure 1.1: Defining and Organizing Relationships Among Data Creates Information
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Data, Information, and Knowledge (continued)
Figure 1.2: The Process of Transforming Data into Information
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Table 1.2: Characteristics of Valuable Information
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Table 1.2: Characteristics of Valuable Information (continued)
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Value of information is directly linked to how it helps decision makers achieve their organizations goals For example, value of information might be measured in:
Time required to make a decision Increased profits to the company
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System
A set of elements or components that interact to accomplish goals A combination of components working together
(1) Refers to a combination of components working together. For example, a computer system includes both hardware and software. A Windows system is a personal computer running the Windows operating system. A desktop publishing system is a computer running desktop publishing software.
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(2) Short for computer system. (3) Short for operating system. (4) An organization or methodology. The binary numbering system, for instance, is a way to count using only two digits.
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Elements System Goal
Inputs
Processing elements
Outputs
Finished film delivered to movie studio Entertaining movie, film awards, profits
Movie
Actors, director, Filming, staff, sets, editing, equipment special effects, distribution
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Figure 1.3: The Components of an Information System
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Input: the activity of gathering and capturing raw data Processing: converting or transforming data into useful outputs Output: production of useful information, usually in the form of documents and reports Feedback: output that is used to make changes to input or processing activities
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An information system can be:
Manual
Example: developing patterns and trends on graph paper for stock analysis
Computerized
Example: using program trading to track the market and trade large blocks of stocks when discrepancies occur
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Computer-based information system (CBIS): single set of hardware, software, databases, telecommunications, people, and procedures configured to collect, manipulate, store, and process data into information
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Figure 1.4: The Components of a Computer-Based Information System
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CBIS components
Hardware: computer equipment used to perform input, processing, and output activities Software: computer programs that govern the operation of the computer Database: organized collection of facts and information Telecommunications: electronic transmission of signals for communications Networks: connect computers and equipment in a building, around the country, and around the world
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CBIS components (continued)
Internet: worlds largest computer network People: manage, run, program, and maintain the system Procedures: strategies, policies, methods, and rules for using a CBIS
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Most common types of information systems used in business organizations
Electronic and mobile commerce systems Transaction processing systems Management information systems Decision support systems Specialized business information systems
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Figure 1.5: Business Information Systems
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E-commerce: any business transaction executed electronically between parties
Companies (B2B) Companies and consumers (B2C) Consumers and other consumers (C2C) Companies and the public sector Consumers and the public sector
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Figure 1.8: Electronic Business
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Transaction: business-related exchange
Payments to employees Sales to customers Payments to suppliers
Transaction processing system (TPS): organized collection of people, procedures, software, databases, and devices used to record completed business transactions
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Figure 1.9: A Payroll Transaction Processing System
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Integrated programs capable of managing a companys vital business operations for an entire multisite organization Coordinate planning, inventory control, production, and ordering
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An effective TPS provides a number of benefits to a company A TPS can speed business activities and reduce clerical costs Data stored in TPSs is used to help managers make better decisions
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Management information system (MIS)
Organized collection of people, procedures, software, databases, and devices Provides routine information to managers/decision makers
Primary focus is operational efficiency
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Figure 1.10: Management Information System
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Decision support system (DSS)
Organized collection of people, procedures, software, databases, and devices Supports problem-specific decision making
Focus is on decision-making effectiveness
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Figure 1.11: Essential DSS Elements
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Knowledge management systems (KMSs): an organized collection of people, procedures, software, databases, and devices to create, store, share, and use the organizations knowledge and experience Artificial intelligence (AI): field in which the computer system takes on the characteristics of human intelligence
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Figure 1.12: The Major Elements of Artificial Intelligence
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Give the computer the ability to make suggestions and act like an expert in a particular field Allow organizations to capture and use the wisdom of experts and specialists The knowledge base contains the collection of data, rules, procedures, and relationships that must be followed to achieve value or the proper outcome
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Simulation of a real or imagined environment that can be experienced visually in three dimensions Immersive virtual reality Applications that are not fully immersive Can be a powerful medium for communication, entertainment, and learning
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Systems development: creating or modifying existing business systems Systems development can be:
Performed in-house Outsourced
To improve results of a systems development project, it is divided into several steps
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Figure 1.14: An Overview of Systems Development
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Systems investigation: gain understanding of the problem to be solved or opportunity to be addressed Systems analysis: defines problems and opportunities of the existing system
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Systems design: how the new system will work to meet the business needs defined during systems analysis Systems implementation: creating or acquiring the various system components defined in the design step, assembling them, and putting the new system into operation Systems maintenance and review: check and modify the system so that it continues to meet changing business needs
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Organization: collection of people and other resources established to accomplish a set of goals An organization is a system
Inputs: resources (materials, people, money) Outputs: goods or services
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Figure 1.15: A General Model of an Organization
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Value chain: series (chain) of activities that includes inbound logistics, warehouse and storage, production, finished product storage, outbound logistics, marketing and sales, and customer service Upstream management: management of raw materials, inbound logistics, and warehouse and storage facilities Downstream management: management of finished product storage, outbound logistics, marketing and sales, and customer service
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Figure 1.16: The Value Chain of a Manufacturing Company
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Supply chain management (SCM)
Determines required supplies, needed quantities, processing, and shipment
Customer relationship management (CRM)
Helps company manage all aspects of customer encounters, including marketing, advertisement, sales, service, and maintaining loyalty
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Organizational culture
Major understandings and assumptions Influences information systems
Organizational change
How organizations plan for, implement, and handle change Can be sustaining or disruptive
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Technology Acceptance Model (TAM): specifies factors that can lead to higher acceptance and usage of technology Technology diffusion: measure of widespread use of technology Technology infusion: extent to which technology permeates a department
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Competitive advantage: significant, longterm benefit to a company over its competition
Ability to establish and maintain a competitive advantage is vital to the companys success
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Five-forces model identifies key factors
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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Cost leadership
Deliver the lowest possible products and services
Differentiation
Deliver different products and services
Niche strategy
Deliver to a small, niche market
Altering the industry structure
Change the industry to become more favorable to organization
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Creating new products and services
Introduce periodically or frequently
Improving existing product lines and service
Make real or perceived improvements
Other strategies
Growth in sales First to market Customizing products and services Hiring the best people
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Considers both strategic advantage and costs Uses productivity, return on investment (ROI), net present value, and other measures of performance
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Figure 1.18: Three Stages in the Business Use of Information Systems
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Output achieved divided by input required Higher level of output for a given level of input means greater productivity
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Earnings growth
Increase in profits
Market share
Percentage of sales in relation to total market
Customer awareness and satisfaction
Based on feedback from internal and external users
Total cost of ownership
Measurement of total cost of owning computer equipment
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Managers must consider the risks of designing, developing, and implementing new or modified information systems Information system may be a failure Costs of development and implementation can be greater than the returns from the new system
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Degree programs
Degrees in information systems Business degrees with a global or international orientation
Computer systems are making IS professionals work easier Opportunities in information systems are not confined to single countries
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Primary responsibilities in information systems
Operations: focuses on the efficiency of IS functions Systems development: focuses on development projects and ongoing maintenance and review Support: provides user assistance, data administration, user training, and Web administration
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Figure 1.19: The Three Primary Responsibilities of Information Systems
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Chief Information Officer (CIO)
Employs 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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Internet careers
Internet Internet Internet Internet strategists and administrators systems developers programmers or Web site operators
Certification
Examples: Microsoft Certified Systems Engineer, Certified Information Systems Security Professional (CISSP), and Oracle Certified Professional
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New and exciting careers have developed in security and fraud detection and prevention
Chief Information Security Officer Chief Security Officer Chief Privacy Officer
Working for a large consulting firm such as Accenture, IBM, and EDS Developing or selling products for a hardware or software vendor Video game de velopment
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Cultural challenges Language challenges Time and distance challenges Infrastructure challenges Currency challenges
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Product and service challenges Technology transfer issues State, regional, and national laws Trade agreements
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Data: raw facts Information: organized collection of facts; has additional value beyond the value of facts themselves System components: input, processing, output, and feedback Computer-based information system (CBIS)
Single set of hardware, software, databases, telecommunications, people, and procedures Collect, manipulate, store, and process data into information
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Transaction processing system (TPS): organized collection of people, procedures, software, databases, and devices used to record completed business transactions Management information system (MIS): organized collection of people, procedures, software, databases, and devices used to provide routine information to managers and decision makers
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Knowledge management system (KMS): an organized collection of people, procedures, software, databases, and devices to create, store, share, and use the organizations knowledge and experience Artificial intelligence (AI): field in which the computer system takes on the characteristics of human intelligence
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Decision support system (DSS): organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making Systems development: creating or modifying existing business systems Competitive advantage: significant, long-term benefit to a company over its competition Primary responsibilities in information systems: operations, systems development, and support
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