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Chapter 1
Foundations of Information Systems in Business

McGraw-Hill/Irwin

Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Learning Objectives Understand the concept of a system and how it relates to information systems. Explain why knowledge of information systems is important for business professionals and identify five areas of information systems knowledge they need.

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Learning Objectives Give examples to illustrate how business applications of information systems can support a firms business processes, managerial decision making, and strategies for competitive advantage. Provide examples of several major types of information systems from your experiences with business organizations in the real world.

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Learning Objectives Identify several challenges that a business manager might face in managing the successful and ethical development and use of information technology in a business. Provide examples of the components of real world information systems Demonstrate familiarity with the myriad of career opportunities in information systems.

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Competitive Advantage Developing products, services, processes, or capabilities that give a company a superior business position relative to its competitors and other competitive forces.
Glossary, p. 637

Attributed to a firm that is leading an industry in some identifiable way, such as sales, revenues or new products. Ch. 2, p. 53 when a firm sustains profits that exceed the average for an industry
Ch. 2, p. 53

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Trends in Information Systems

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What is E-Business? An online exchange of value


Conducting business on the Internet

Using Internet technologies to empower


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

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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 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

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Information systems combine: Operations Support Systems


Transaction Processing systems Process Control Systems Enterprise Collaboration Systems
(Figure 1.7)

Management Support Systems


Management Information Systems Decision Support Systems Executive Information Systems

(Figure 1.9)

Other Systems
Expert Systems Knowledge Management Systems Strategic Information Systems

(Figure 1.11)

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Two Ways to Process Transactions Transaction Processing (batch)


Accumulate transactions over time Process periodically Example: a bank receives checks during the day and processes in a batch at night

Online Processing (real-time)


Process transactions immediately Example: a bank processes an ATM withdrawal immediately

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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


Example: credit application advisor

Knowledge Management Systems


Support creation, organization, and dissemination of business knowledge Example: intranet access to best business practices

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 Examples: accounting, finance, or marketing
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IT Challenges and Opportunities

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Responsibility and Accountability IT plays an integral role in every facet of a business Failure is often pinned on IT Cultivate a culture that embraces change Break projects into pieces Set realistic expectations There will always be problems
Thats life in IT

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Agile Systems Development at Con-Way, Inc. Old system


Months long design stage Months or years to develop Some projects never completed

Agile System
Small segments with one month deadlines Interaction between staff and IT Feedback from each segment drives the next Faster overall completion and less waste

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Developing IS Solutions

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Challenges and Ethics of IT What are the ethical responsibilities? What are the risks? How can you protect yourself and your company from computer crime?

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Hannaford Securing Customer Data Security breach millions of credit and debit card numbers stolen Law suits argued inadequate security caused risk for fraud Credit companies complained about expense to issue new account numbers Securing sensitive data is a primary concern

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IT Careers IT employment opportunities are strong Shortages of IT personnel are frequent Long-term job outlook is positive and exciting Starting salaries are high

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IT Careers Job increases will be driven by


Rapid growth Backfilling positions Information sharing environments Need for problem-solving skills Falling hardware and software prices

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IT Careers

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Business Analysts serve critical role CIO broker between management and IT Business Analyst
In the trenches Analyzes business need and creates solution Communicates solution to technicians Balances IT resources with business needs 5-10 years experience Technical undergraduate degree and MBA Process driven through changes to finish $45,000 to $100,000

Business Analyst credentials

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The IS Function Major functional area of business Important contributor to


Efficiency, productivity, morale, customer service and satisfaction

Major source of information for decisions Vital ingredient in developing competitive products and services Dynamic and challenging career opportunity Key component of networked business

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System Concepts help us understand Technology


Hardware, software, data management, telecommunications networks

Applications
Programs to support inter-connected systems

Development
Developing ways to use information technology

Management
Emphasizes the quality, strategic business value, and security of an organizations information systems

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What is a System? Interrelated components Defined boundary Working together Common objectives Accepting inputs and producing outputs Organized transformation process

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RWC 2: Innovating with IT New York Times


Newspaper industry in trouble Elevated IT-enabled innovation
BlackBerry applications On-screen reading system

Boston Scientific
Open sharing of engineering data Tighter control near patent application stage

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Basic Functions of a System Basic Functions


Input Processing Output

Cybernetic System
Feedback Control

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A Cybernetic System

What are the components for feedback and control?

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A Business as a System

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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 Products
Management reports and business documents using text and graphics displays, audio responses, and paper forms
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IS Activities Input of data resources Processing of data into information Output of information products Storage of data resources Control of system performance

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RWC 3: Role of Information Technology Sew What?


Provides custom theatrical draperies and fabrics worldwide Revenue growing more than 45% per year Recognized for innovative use of technology to improve its customers experience
Intuits Quick-Books Enterprise Solutions Dell PowerEdge servers

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RWC 4: Critical Importance of IT Processes Jet Blue


Good IT processes are as important as hardware and software Smaller and less critical processes have large ramifications Crisis in 2007
Information system developed in 24 hours Implemented as a full-time system in the company

Veterans Administration
System failure took down key applications

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