Department of Management and Entrepreneurship

Faculty of Management and Finance

University of Ruhuna
Course : BBA 3202, Management Information Systems
Lecturer : Mrs. T.A.N.R.Jayarathne

Handout: 01

Introduction to Management Information Systems

Information systems(IS) in business -Why study IS?
Information system has become as integrated in to our daily business activities as accounting,
finance, operations management, marketing,human resource management, or any other major
business function. IS and technologies are vital components of successful business and
organizations.They thus constitute an essential field of study in business administration and
management, which is why most business majors include a course in IS. Since you probably
intend to be a manager, entrepreneur, or business professional, it is just as important to have a
basic understanding of IS as it is to understand any other functional area in business.
Information technologies, including Internet-based information systems, are playing vital and
expanding roles in business. Information technology can help all kinds of businesses improve
the efficiency and effectiveness of their business processes, managerial decision making, and
workgroup collaboration, which strengths their competitive positions in rapidly changing
marketplaces. This benefit occurs whether the information technology is used to support
product development teams, customer support processes, e-commerce transactions, or any
other business activity.
What is an Information System?
An IS can be any organized combination of people, hardware, software, communications
networks, data resources, and policies and procedures that stores, retrieves, transforms,and
disseminates information in an organization. People rely on modern information systems to
communicate with one another using a variety of physical devises (hardware),information
processing instructions and procedures (software) ,communication channels (networks), and
stored data (data resources) .
Although todays information system are typically thought of as having something to do with
computers, we have been using IS since the dawn of civilization. Even today we make
regular use of IS that have nothing to do with a computer. Some of the following examples of
IS:

Card catalogs in a library are designed to store data about the books in an organized
manner that allows readers to locate a particular book by its title, author name, subject, or a
variety of other approaches.
The cash register at your favorite fast-food restaurant is part of a large Is that tracks the
products sold,the time of a sale,inventory levels,and the amount of money in the cash
drawer; it also contributes to the analysis of product sales in any combination of locations
anywhere in the world.
Your book bag, day planner, notebooks, and file folders are all part of a IS designed to help
you organized the inputs provided to you via handouts,lectures,presentations and
discussions.They also help you process these inputs into useful outputs:homework and good
exam grades.

A paper-based accounting ledger as used before the advent of computer-based accounting

systems is an iconic example of an IS. Business used this type of system for centuries to
record the daily transactions and keep a record of the balances in their various business and
customer accounts.

Information means the data that have been shaped into a form that is meaningful and useful
to human beings.
Data in contrast, are streams of raw facts representing events occurring in organizations or
the physical environment before have been organized and arranged into a form that people
can understand and use.
Three activities in information are input, processing and output. Input captures or collects
raw data from within the organization or from its external environment. Processing converts
this raw input into a meaningful form. Output transfers the processed information to the
people who will use it or to the activities for which it will be used. Information system also
requires feedback, which is output that is returned to appropriate member of the organization
to help them evaluate or correct the input stage.
Major areas of information systems

Business Drivers of Information Systems

What information systems so essential today? Why are businesses investing so much in
information systems and technologies? They do so to achieve six important business
objectives:
Operational Excellence - information systems and technologies are some of the most
important tools available to managers for achieving higher levels of efficiency and
productivity in business operations, especially when coupled with changes in business
practices and management behavior.
New products, services and business models - information systems and technologies
are major enabling tool for firms to create new products and services, as well as
entirely new business models.
Customer and supplier intimacy- how to really know your customers or suppliers is a
central problem for businesses with millions of offline and online customers.
Improved decision making - information system and technologies have made it
possible for managers to use real time data from the marketplace when making
decisions.
Competitive advantage- doing things better than the competitors, charging less for
superior products, and responding to customers and suppliers in real time all add up to
higher sales and higher profits that your competitors cannot match.
Survival- firms turn to information systems and technologies to provide the capability
to respond to these information retention and reporting requirements.
The Fundamental roles of IS in business

There are three fundamental reasons:

1. Support of business processes and operations.
Ex; most retail stores use computer based IS to help their employees record, customer
purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales
trends.
2. Support of decision making by its employees and managers.
IS also help store managers and other business professionals make better decisions. Ex;
decision about what lines of merchandise need to be added or discontinued and what kind of
investments they require are typically made after an analysis provided by computer-based
information systems.
3. Support of its strategies for competitive advantage.
Gaining a strategic advantage over competitors requires the innovative application of
information technologies. Ex;store management might make a decision to install touch-screen
in all stores, with links to the e-commerce web site for online shopping.
This offering might attract new customers and build customer loyalty because of the ease of
shopping and buying merchandise provided by such IS.
Trends in Information Systems

The role of E-Business in Business

Many businesses today are using internet technologies to Web-enable their business
processes and create innovative e-business applications.

E business:As the use of internet technologies to work and empower business process,
electronic commerce, and enterprise collaboration within a company and with its
customers, suppliers, and other business stakeholders. E-business can be more
generally considered as online exchange of value (exchange of information, money,
resources, and services).
Intranet:The internet and internet like networks those inside the enterprise (intranet)
and between an enterprise
Extranet: The internet and internet like networks between an enterprise and its trading
partners.
Electronic commerce: Is the buying, selling, marketing, and servicing of products,
services, and information over a variety of computer networks.
Many businesses now use the Internet,intranets,extranets and other networks to support every
step of the commercial process,including everything from advertizing,sales,and customer
support on the World Wide Web to internet security and payment mechanisms that ensure
completion of delivery and payment processes.
Ex; e-commerce systems include Internet web sites for online sales, extranet access to
inventory databases by large customers, and the use of corporate intranets by sales reps to
access customer records for customer relationship management.
5

Introduction toManagement Information Systems

A definition of Management Information System, as the term is generally understood, is an
integrated, user-machine system for providing information to support operations,
management and decision- making functions in an organization.
The system utilizes computer hardware and software; manual procedures; models for
analysis, planning, control and decision making; and a data base.
The elements of the definition are highlighted below.
A management information system is
An integrated user- machine system
For providing information
To support the operations, management, analysis, and decision making functions
In an organization
The system utilizes
Computer hardware (CPU, Monitor, keyboard, Printer etc) and software (system and
application)
Manual procedures
Models for analysis, planning, , control and decision making and
A data base (data stored in Files)