Foundation Concepts Why study information systems and information technology?

Vital component of successful businesses Helps businesses expand and compete Improves efficiency and effectiveness of business processes Facilitates managerial decision making and workgroup collaboration

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Why Study Information Systems

Internet-based systems have become a necessary ingredient for business success in todays dynamic global environment.

Information technologies are playing an expanding role in business.

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Information Systems vs. Information Technology

Information Systems (IS) all components and resources necessary to deliver information and information processing functions to the organization Information Technology (IT) various hardware components necessary for the system to operate

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Types of Information Technologies Computer Hardware Technologies

including microcomputers, midsize servers, and large mainframe systems, and the input, output, and storage devices that support them

Computer Software Technologies

including operating system software, Web browsers, software productivity suites, and software for business applications like customer relationship management and supply chain management

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Types of Information Technologies Telecommunications Network Technologies

including the telecommunications media, processors, and software needed to provide wire-based and wireless access and support for the Internet and private Internet-based networks

Data Resource Management Technologies

including database management system software for the development, access, and maintenance of the databases of an organization
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What is a System? A set of interrelated components With a clearly defined boundary Working together To achieve a common set of objectives

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What is an Information System? An organized combination of

People Hardware and software Communication networks Data resources Policies and procedures

This system
Stores, retrieves, transforms, and disseminates information in an organization
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Information Technologies Information Systems

All the components and resources necessary to deliver information and functions to the organization Could be paper based

Information Technologies
Hardware, software, networking, data management

Our focus will be on computer-based information systems (CBIS)

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What Should Business Professionals Know?

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Foundation Concepts Foundation Concepts Fundamental behavioral, technical, business, and managerial concepts about the components and roles of information systems.

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Information Technologies Information Technologies - Major concepts, developments, and management issues in information technology (hardware, software, networks, data resource management, and other information processing technologies such as the Internet).

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Business Applications Business Applications - The major uses of information systems for the operations, management and competitive advantage of an e-business enterprise, including electronic business, commerce, collaboration and decision-making using the Internet, intranets, and extranets.

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Development Processes Development Processes - How business professionals and information specialists plan, develop and implement information systems to meet e-business opportunities using several strategic planning and application development approaches.

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Management Challenges Management Challenges - The challenges of effectively and ethically managing e-business technologies, strategies, and security at the end user, enterprise, and global levels of a business.

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Fundamental Roles of IS in Business

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Support at Lower Level Support of its business processes and operations. Example: Most retail stores now use computer-based information systems to help them record customer purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales trends.

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Support at Middle Level Support of decision making by its employees and managers. Example: Decisions about what lines of merchandise need to be added or discontinued, or about what kind of investment they require, are typically made after an analysis provided by computer-bases information systems.

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Support at the Top Level Support of its strategies for competitive advantage. Example: Store management might make a decision to install touch-screen kiosks in all of their stores, with links to their ecommerce website for online shopping. This might attract new customers and build customer loyalty because of the ease of shopping and buying merchandise provided by such information systems.
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Trends in Information Systems

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What is E-Business? Using Internet technologies to empower

Business processes Electronic commerce Collaboration within a company Collaboration with customers, suppliers, and other business stakeholders

In essence, an online exchange of value

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How E-Business is Being Used

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E-Business Use Reengineering

Internal business processes

Enterprise collaboration systems

Support communications, coordination and coordination among teams and work groups

Electronic commerce
Buying, selling, marketing, and servicing of products and services over networks

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Types of Information Systems Operations Support Systems

Efficiently process business transactions Control industrial processes Support communication and collaboration Update corporate databases

Management Support Systems

Provide information as reports and displays Give direct computer support to managers during decision-making
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Purposes of Information Systems

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Operations Support Systems What do they do?

Efficiently process business transactions Control industrial processes Support communications and collaboration Update corporate databases

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Types of Operations Support Systems Transaction Processing Systems

Record and process business transactions Examples: sales processing, inventory systems, accounting systems

Process Control Systems

Monitor and control physical processes Example: using sensors to monitor chemical processes in a petroleum refinery

Enterprise Collaboration Systems

Enhance team and workgroup communication Examples: email, video Copyright 2006, The McGraw-Hill Companies, Inc. All rights reserved. conferencing 1 - 26

Two Ways to Process Transactions Batch Processing

Accumulate transactions over time and process periodically Example: a bank processes all checks received in a batch at night

Online Processing
Process transactions immediately Example: a bank processes an ATM withdrawal immediately
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Management Support Systems What do they do?

Provide information and support for effective decision making by managers
Management information systems Decision support systems Executive information systems

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Types of Management Support Systems Management Information Systems (MIS)

Reports and displays Example: daily sales analysis reports

Decision Support Systems (DSS)

Interactive and ad hoc support Example: a what-if analysis to determine where to spend advertising dollars

Executive Information Systems (EIS)

Critical information for executives and managers Example: easy access to actions of competitors
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Other Information Systems Expert Systems

Provide expert advice Example: credit application advisor

Knowledge Management Systems

Support creation, organization, and dissemination of business knowledge throughout company Example: intranet access to best business practices
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Other Information Systems Strategic Information Systems

Help get a strategic advantage over customer Examples: shipment tracking, e-commerce Web systems

Functional Business Systems

Focus on operational and managerial applications of basic business functions Examples: accounting, finance, or marketing

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Operation Support Systems Definition: Information systems that process data generated by and used in business operations Goal is to efficiently process business transactions, control industrial processes, support enterprise communications and collaboration, and update corporate databases
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Operations Support Systems

Transaction Processing Systems (TPS) process data resulting from business transactions, update operational databases, and produce business documents. E.g. Sales, Inventory, Accounting Systems Process Control Systems (PCS) monitor and control industrial processes. E.g. Power generation, Petroleum refining & Steel production systems Enterprise Collaboration Systems support team, workgroup, and enterprise communications an collaboration. E.g. E mail, Chat, Video conferencing systems
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Management Support Systems Definition: Information systems that focus on providing information and support for effective decision making by managers

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Management Support Systems

Management Information Systems (MIS) provide information in the form of pre-specified reports and displays to support business decision making. E.g. Sales Analysis, Production performance etc. Decision Support Systems (DSS) provide interactive ad hoc support for the decision making processes of managers and other business professionals. E.g. Product pricing, Sales forecasting Executive Information Systems (EIS) provide critical information from MIS, DSS, and other sources tailored to the information needs of executives. E.g. Competitors Pricing
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Other Classifications
Expert Systems provide expert advice for operational chores or managerial decisions E.g. Credit Application Advisor, Maintenance Diagnostics Systems

Knowledge Management Systems support the creation, organization, and dissemination of business knowledge to employees and managers E.g. Access to best business practices, Sales proposal strategies, Customer problem resolution systems
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IS Classifications by Scope
Functional Business Systems support basic business functions E.g. Financial, Accounting, Marketing, Operations, HR Management Systems Strategic Information Systems support processes that provide a firm with strategic products, services, and capabilities for competitive advantage E.g. On line stock trading, Shipment tracking systems Cross-functional Information Systems integrated combinations of information systems E.g. SCM, CRM, ERP Systems
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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Why is it so hard to succeed?

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Measuring IT Success Efficiency

Minimize cost, time, and use of information resources

Effectiveness
Support business strategies Enable business processes Enhance organizational structure and culture Increase customer and business value

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Success & Failure with IS

Reasons for Success User involvement Executive management support Clear statement of requirements Proper planning Realistic expectations Reasons for Failure Lack of user input Incomplete requirements and specifications Changing requirements and specifications Lack of executive support Technological incompetence
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IT Challenges and Opportunities

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Ethical Challenges of IT

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Ethical Challenges of IT
As a prospective managerial end user and knowledge worker in a global society, you should also become aware of the ethical responsibilities generated by the use of information technology. For example: What uses of information technology might be considered improper, irresponsible, or harmful to other individuals or to society? What is the proper use of an organizations information resources? What does it take to be a responsible end user of information technology? How can you protect yourself from computer crime and other risks of information technology?
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Challenges and Ethics of IT Application of IT

Customer relationship management Human resources management Business intelligence systems

Potential Harm
Infringements on privacy Inaccurate information Collusion

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Challenges and Ethics of IT Potential Risks

Consumer boycotts Work stoppages Government intervention

Possible Responses
Codes of ethics Incentives Certification

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Ethical Responsibilities What uses of IT might be considered improper or harmful to other individuals or society? What is the proper business use of the Internet or a companys IT resources? How can you protect yourself from computer crime?

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IT Careers Economic downturns have affected all job sectors, including IT Rising labor costs are pushing jobs to India, the Middle East, and Asia-Pacific countries However, IT employment opportunities are strong, with new jobs emerging daily Shortages of IT personnel are frequent The long-term job outlook is positive and exciting
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IT Career Trends
Rising labor costs have resulting in large-scale movement to outsource programming functions to India, the Middle East and Asia-Pacific countries. More new and exciting jobs emerge each day as organizations continue to expand their wide-scale use of IT. Frequent shortages of qualified information systems personnel. Constantly changing job requirements due to dynamic developments in business and IT ensure long-term job outlook in IT remains positive and exciting.
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IT Careers

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IT Careers Job increases will be driven by

Rapid growth in computer system design and related services The need to backfill positions

Information sharing and client/server environments

The need for those with problem-solving skills

Falling hardware and software prices, which will fuel expanded computerization of operations
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The IS Function The IS function is

A major functional area of business An important contributor to operational efficiency, employee productivity, morale, customer service and satisfaction A major source of information and support for decision making

A vital ingredient in developing competitive products and services in the global marketplace
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The IS Function The IS function is

A dynamic and challenging career opportunity A key component of todays networked business

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The IS Function represents A major functional area of business equally as important to business success as the functions of accounting, finance, operations management, marketing, and human resource management. An important contributor to operational efficiency, employee productivity and morale, and customer service and satisfaction.
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The IS Function represents A dynamic, rewarding, and challenging career opportunity for millions of men and women.

A key component of the resources, infrastructure, and capabilities of todays networked business enterprise.

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The IS Function represents

A major source of information and support needed to promote effective decision making by managers and business professionals. A vital ingredient in developing competitive products and services that give an organization a strategic advantage in global marketplace.
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System Concepts: A Foundation System concepts help us understand

Technology: hardware, software, data management, telecommunications networks
Applications: to support inter-connected information systems Development: developing ways to use information technology includes designing the basic components of information systems Management: emphasizes the quality, strategic business value, and security of an organizations information systems
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Developing IS Solutions

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Developing IS Solutions
Developing information system solutions to business problems is the responsibility of many business professionals today. For example: As a business professional, you will be responsible for proposing or developing new or improved uses of information technology for your company. As a business manager, you will frequently manage the development efforts of information systems specialists and other business end users.
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Case #2: Connecting the Mobile Workforce Goals: Keep 3,500 highly mobile airline pilots:
Trained on the latest technology and procedures Plugged into the corporate infrastructure Informed about schedules, weather events, and other facts that affect their jobs

Control costs
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Case #2: Connecting the Mobile Workforce

Productivity and Efficiency Improvements: Pilots can access updated data electronically. Pilots can work in a variety of locations including airplanes, airports, hotels, and other remote locations. Pilots appreciate the convenience of not having to carry heavy manuals and documentation to multiple locations. Pilots can take their required training on their laptops during downtime in any airport.
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Case #2: Connecting the Mobile Workforce 1. Are many of Lufthansas challenges identified in the case similar to those being experienced by other businesses in todays global economy? Explain and provide some examples. 2. What other tangible and intangible benefits, beyond those identified by Lufthansa, might a mobile workforce enjoy as a result of deploying mobile technologies? Explain.
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Case #2: Connecting the Mobile Workforce 3. Lufthansa was clearly taking a big risk with their decision to deploy notebook computers to their pilots. What steps did they take to manage that risk and what others might be needed in todays business environment? Provide some examples.

4. How might mobile computing improve your productivity and efficiency? Provide some examples.
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Case #2: Connecting the Mobile Workforce 5. What challenges in pilot morale, performance, and management might arise with the use of mobile computing devices in the field and in the cockpit? What preventive actions or solutions to these potential problem areas could you suggest?

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What is a System? A system is

A set of interrelated components
With a clearly defined boundary Working together To achieve a common set of objectives By accepting inputs and producing outputs

In an organized transformation process

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System Components
A system (sometimes called a dynamic system) has three basic interacting components or functions. Input capturing and assembling elements that enter the system to be processed E.g. Raw materials, Data

Processing transformation steps that convert input into output E.g. Manufacturing Process, Mathematical Calculations Output transferring elements that have been produced by a transformation process to their ultimate destination E.g. Finished Products, Management Information
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System Components
Two additional components are: Feedback data about the performance of a system E.g. Data about sales performance is a feedback to Sales Manager Control monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal E.g. A sales Manager exercises control for assigning new territories to sales persons after evaluating feedback about their performance
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A Cybernetic System

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Components of an IS

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Information System Resources People Resources

Specialists End users

Hardware Resources
Machines Media

Software Resources
Programs Procedures
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Information System Resources Data Resources

Product descriptions, customer records, employee files, inventory databases

Network Resources
Communications media, communications processors, network access and control software

Information Resources
Management reports and business documents using text and graphics displays, audio responses, and paper forms Copyright 2006, The McGraw-Hill Companies, Inc. All rights reserved. 1 - 76

Data Versus Information Data are raw facts about physical phenomena or business transactions Information is data that has been converted into meaningful and useful context for end users Examples:
Sales data is names, quantities, and dollar amounts Sales information is amount of sales by product type, sales territory, or salesperson
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Data Versus Information

Monthly Sales Report for West Region

Sales Rep: Charles Mann Emp No. 79154 Item Qty Sold Price TM Shoes 1200 $100

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IS Activities Input of data resources

Data entry activities

Processing of data into information

Calculations, comparisons, sorting, and so on

Output of information products

Messages, reports, forms, graphic images

Storage of data resources

Data elements and databases

Control of system performance

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Monitoring and evaluating feedback

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Recognizing Information Systems Business professionals should be able to look at an information system and identify
The people, hardware, software, data, and network resources they use The type of information products they produce

The way they perform input, processing, output, storage, and control activities
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Total Cost of Ownership (TCO) TCO Model Developed by Gartner Group helps the enterprise
In their strategic management of IT costs In their efforts to contain the operating cost of their IT environment

TCO model breaks down the IT costs in two categories

Direct Indirect
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Total Cost of Ownership (TCO)

Direct Costs includes that arise from Capital expenses, IS Management, Support and Development, Outsourcing fees, Training, Travel, Maintenance and Communications Indirect (Unbudgeted) Costs originate from less concrete aspects like end user operations and downtimes. These costs are often hidden and are not measured and tracked Because of this many organizations reduce direct costs, transferring the burden of support and unreliability to the end users
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Total Cost of Ownership (TCO)

TCO costs varies greatly for different types of computing devices TCO of a notebook is between 20% to 50% higher than a comparable desktop and the way a notebook is used Gartner group has defined three user portfolios:
A desktop user ( 100% desktop use ) A road warrior ( 20% office use and 80% mobile use of Notebook ) A day extender ( 80% office use and 20 % mobile use of Notebook )
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Total Cost of Ownership (TCO)

Total cost of ownership of technology assets: When calculating the costs of systems, be sure to include all the costs:
Hardware acquisition Software acquisition Installation Training Support Maintenance Infrastructure requirements Downtime Space and energy
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Total Cost of Ownership (TCO) Total cost of ownership of technology assets:

Hardware acquisition Purchase price of computer hardware equipment including computers, terminals, storage and printers Software acquisition Purchase or license of software for each user Installation Cost to install computers and software Training Cost to provide training to IS specialists and end users
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Total Cost of Ownership (TCO) Total cost of ownership of technology assets:

Support Cost to provide on going technical support, help desks etc. Maintenance Cost to upgrade the hardware and software Infrastructure Cost to acquire, maintain and support related infrastructure, such as networks and specialized equipments like storage back up units
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Total Cost of Ownership (TCO) Total cost of ownership of technology assets:

Downtime Cost of lost productivity if hardware and software failures cause the system to be unavailable for processing and user tasks Space and Energy Real estate and utility costs for housing and providing power for the technology

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Which of the following is not a component of the Total Cost of Ownership of a firms IT infrastructure?

1. Travel to and from work 2. Hardware acquisition 3. Downtime 4. Space and energy

5. Training

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Which of the following is not a component of the Total Cost of Ownership of a firms IT infrastructure?

1. Travel to and from work

2. Hardware acquisition

3. Downtime
4. Space and energy 5. Training

The TCO cost components include hardware and software acquisition, installation, training, support, maintenance, infrastructure, downtime, and space and energy. Most firms simply do not know the total cost of ownership of their IT infrastructure.
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Case #3: Failure to Success with IT

Aviall on the Ropes: A failed enterprise resource planning system that had been designed to automate and integrate the companys order processing, inventory control, financial accounting, and human resources business systems Couldnt properly order or ship items to customers Quarterly sales dropping Airline industry shrinking
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Case #3: Failure to Success with IT Goals: Save Aviall from financial disaster Turn Aviall from a catalog business into a full-scale logistics business that hundreds of aviation parts manufacturers and airlines could depend on for ordering, inventory control, and demand forecasting

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Case #3: Failure to Success with IT Challenges: Integrate five Web-enabled e-business software systems from different software providers Customized pricing for 17,000 customers who receive various types of discounts 380,000 different aerospace parts
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Case #3: Failure to Success with IT

Benefits of Aviall.com: Customer order obtained via web costs only 39 cents compared with $9 for an order taken via telephone

Sales force freed from routine order taking can devote more time to developing relationships with customers
Customers have the ability to transfer orders from an Excel spreadsheet directly to website
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Case #3: Failure to Success with IT

Benefits of Aviall.com (cont): Customers can receive pricing and availability information on parts within 5 seconds Helps build relationships with suppliers by providing them with customer ordering data that enables them to better match production with demand

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Case #3: Aviall Inc.

1. Why do you think that Aviall failed in their implementation of an enterprise resource planning system? What could they have done differently? 2. How has information technology brought new business success to Aviall? How did IT change Avialls business model?

3. How could other companies use Avialls approach to the use of IT to improve their business success? Give several examples.
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Case #3: Aviall Inc Take Away. 1. In spite of bad times, Lacik decided to invest $30 million to $40 million in IT infrastructure 2. Aviall used best of breed concept and managed integration using common business databases 3. Project size has to be estimated correctly and proper Project planning is essential for successful Implementation 4. Analysis of business requirements prior to ERP solution selection
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