Information Systems

Information = data in context System = collection of parts that work together to achieve some purpose

Information Technology

People
Business Processes

IS

People IS focuses on the organisation (People, Business processes Information & business processes, information technology ) Technology IS collects, processes, stores, uses & distributes information Information to gain a strategic advantage IS is one force which influences organisations
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Information Systems Framework

Information Systems Concepts (Continued)

Foundation Concepts
Fundamental concepts about the components and roles of information systems.

Information Technologies
Major concepts, developments, and management issues in information technology.

Information Systems Concepts (Continued)

Business Applications The major uses of information systems for operations, management, and competitive advantage. Development Processes How business professionals and information specialists plan, develop, and implement information systems. Management Challenges The challenge of managing ethically and effectively.

What is a system? A group of interrelated or interacting elements forming a unified whole, OR A group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process (dynamic system). (diagram is available: reproduce from the text) Three basic interacting components:
Input Processing (transformation process) Output

Add Feedback and Control Loops..

And the system, now called a cybernetic system, becomes even more useful.
Self-monitoring Self Self-regulating Self-

System Characteristics
A system exists and functions in an environment containing other systems. Subsystem a component of a larger system. Systems that share the same environment may be connected to one another through a shared boundary, or interface. Open versus closed system. Adaptive system

Components of an INFORMATION System

Components of an Information System (Continued)

People Resources
End Users IS Specialists

Hardware Resources
Computer systems Peripherals

Software Resources
System software Application software Procedures

Components of an Information System (Continued)

Data Resources Data versus Information Network Resources

Communication media Network support

Data Versus Information

Monthly Sales Report for West Region Sales Rep: ram Emp No. 79154 Item Qty Sold Price TM Shoes 1200 10000

Attributes of Information Quality

 Information Quality
Timeliness
Provided WHEN it is needed Up-to-date when it is provided Provided as often as needed Provided about past, present, and future time periods as necessary

 Information Quality (continued)

Content
Free from errors Should be related to the information needs of a specific recipient for a specific situation Provide all the information that is needed Only the information that is needed should be provided Can have a broad or narrow scope, or an internal or external focus Can reveal performance

 Information Quality (continued)

Form
Provided in a form that is easy to understand Can be provided in detail or summary form Can be arranged in a predetermined sequence Can be presented in narrative, numeric, graphic, or other forms Can be provided in hard copy, video, or other media.

Information Products Focus is on the end-user. end They are the result of IS activities
Input Processing Output Storage Control

Section II
Foundation concepts: concepts: Business applications, Development, and Management

Major Roles of IS

Support Competitive Advantage Support Business Decision Making

Support of Business Processes and Operations

Forces influencing Organisations

Individuals & Roles

External Technological Environment

Information Systems
Strategy Business Processes Information & Communication Technology

External SocioSocio-economic Environment

Organisational Structure

Organisation Boundary When any one force changes, the others are affected
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Forces influencing Organisations

key objectives; 1) cost control, 2) risk management, 3) standardization, 4) integration, 5) customer service, 6) efficient business processes, 7) operational efficiency & 8) robust & effective ICT infrastructure Individuals & Roles
communicate, train

Technology External available

Technological Environment

Information Systems new integrated ERP,CRM,DMS

Strategy Go-prepaid BP
BSC,DRP, SLA New ways of collecting $

ICT- upgrade NW
Design, Develop, Test & Install ICT

Government External Endorsement

SocioSocio-economic Environment

Organisational Structure
IA in all IS, central Close & create Depts

Organisation Boundary

IS is a change instigator in organisations

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The Competitive Environment

Threat of New Entrants Bargaining Power of Suppliers Rivalry Among Existing Competitors Threat of Substitutes

Bargaining Power of Customers

Fundamental Competitive Strategies - Cont.

Cost Leadership Strategies Differentiation Strategies Innovation Strategies Growth Strategies Alliance Strategies

Strategic Uses of Information Technology

Strategy
Improving Business Process Use IT to reduce costs of doing business Promote Business Innovation Locking in Customers and Suppliers Use IT to improve quality Use IT to link business to customers and suppliers

IT Role

Use IT to create new products or services

Outcome

Enhance Efficiency

Create New Business Opportunities

Maintain Valuable Customers and Relationships

Strategic Uses of Information Technology

Strategy
Raise Barriers to Entry Increase amount of investment or complexity of IT needed to compete Build a Strategic IT Platform Build a Strategic Information Base Use IT to provide information to support firms competitive strategy

IT Role

Leverage investment in IS resources from operational uses to strategic uses

Outcome

Increase Market Share

Create New Business Opportunities

Enhance Organizational Collaboration

The Internet Value Chain

Internet Capability Marketing and Product Research Data for market research, establishes consumer responses Sales and Distribution Support and Customer Feedback Access to customer comments online Immediate response to customer problems Enhanced Customers Satisfaction

Benefits to Company

Low cost distribution Reaches new customers Multiplies contact points

Opportunity for Advantage

Increase Market Share

Lower Cost Margins

The Value Chain

Administrative Coordination & Support Services Human Resource Management Technology Development Procurement of Resources

Inbound Outbound Operations Logistics Logistics

Marketing Customer and Service Sales

Customer-Focused e-Business
Let customers place orders directly
Let customers check order history and delivery status Build a community of customers, employees, and partners

Let customers place orders thru distribution partners Transaction Database Link Employees and distribution partners

Customer Database

Give all employees a complete view of customers

The Customer- Focused Agile Competitor

Anticipation of future needs Customization Cooperate with Business Partners and Competitors

Give Customers Solutions to Problems

Conformance Organize to Master Change

Leverage the Impact of People and IS Resources

Business Reengineering and Quality Business Quality Business Management Reengineering Improvement
Definition Target Potential Payback Risk
Incrementally Improving Existing Processes Any Process 10%-50% Improvements Low Radically Redesigning Business Systems Strategic Business Processes 10-Fold Improvements High

Same Jobs - More Efficient Big Job Cuts; New Jobs; What Changes? Major Job Redesign

Primary Enablers

IT and Work Simplification

IT and Organizational Redesign

Management and Technology Implications

Improved employee effectiveness. Increased efficiency. Empowered employees. Information overload. Enhanced collaboration.

Trends in Information Systems

Types of Information Systems

Operations Information Systems  Transaction-processing systems.  Process control systems.  Office automation systems. Management Information Systems  Information-reporting systems.  Decision support systems.  Executive information systems.  Groupware.

Types of Information Systems

1. OPERATIONS SUPPORT SYSTEMS

Transaction processing systems
Batch transaction data accumulate over time, processed periodically. Real-time data processed immediately after a transaction Realoccurs.

Process Control Systems monitor & control physical processes. Enterprise Collaboration Systems

Types of Information Systems cont

2.MANAGEMENT SUPPORT SYSTEMS

Management Information Systems pre-specified prereports & displays to support decision-making. decision-making. Decision Support Systems provide interactive ad hoc support. support. Executive Information Systems critical information tailored to the information needs of executives. executives.

Ex. 6.10

Basic Elements of Management Information Systems

Corporate and External Databases

Decision Support Systems

Operations Information Systems

Management Information Systems

Executive Information Systems

SOURCE: Adapted from Ralph M. Stair and George W. Reynolds, Principles of Information Systems: A Managerial Approach, 4th ed. (Cambridge, Mass.: Course Technology, 1999), 391.

Reporting Systems

Groupware Systems

Types of Information Systems cont

3. OTHER CLASSIFICATIONS
Expert systems expert advice Knowledge management systems support the creation, organization, & dissemination of business knowledge Functional business systems support the basic business functions Strategic information systems strategic advantage

Developing IS Solutions to Business Challenges

In Summary, the IS Function

Is a major functional area of business. Is an important contributor to operational efficiency, employee productivity and morale, and customer service & satisfaction. Is a major source of information and support for decision making. Provides a strategic advantage in developing competitive products & services.

Discussion Questions
How can information technology support a companys business processes and decision making, and give it a competitive advantage? How does the use of the Internet, intranets, and extranets by an e-business enterprise support their eeecommerce activities? Why do big companies still fail in their use of information technology? What should they be doing differently?

Discussion Questions (continued) How can a manager demonstrate that he or she is a responsible end user of information systems? What are some of the toughest management challenges in developing IT solutions to solve business problems and meet new e-business eopportunities? Why are there so many conceptual classifications of information systems? Why are they typically integrated in information systems found in the real world?

Section III

Managerial Decision Making and Information Technology

Intelligence Intelligence is defined as being endowed with the faculty of reason Some of the key measures that need to be addressed in order to achieve intelligent commerce are: Category trends: monitoring the size and growth of different categories by product, region, and market. Consumer trends: identifying consumer needs, purchase characteristics, personal characteristics, and product affinity characteristics. Causal factors: assessing the impact of advertisements, promotions, and events on customer behaviour and the relationship of these triggers to sales and profit.

Strategy: targeting markets, positioning products, identifying options, pricing, and establishing benchmarks for performance. Opportunity gaps: identifying sales opportunities, up-selling, crossselling, regional variations, market share levels. Data mining is the term that is now applied to the use of artificial intelligence (AI) in the discovery of valuable data patterns that provide insights into the behaviour of the subject of the mining activity.

Information Technology
The hardware, software, telecommunications, database management, and other technologies used to store data and make them available in the form of information for organizational decision making.

Decisions and Decision Making

A decision is a choice made from available alternatives. Decision making is the process of identifying problems and opportunities and then resolving them.

Types of Decisions
Programmed decisions situations that occur often enough to enable decision rules to be developed. Nonprogrammed decisions are made in response to situations that are unique, are poorly defined and largely unstructured.

Decision Making Conditions

Certainty all the information the decision maker needs is fully available. Risk decision has clear-cut goals. good information is available. future outcomes associated with each alternative are subject to chance.

Decision Making Conditions (contd.)

Uncertainty managers know which goals they wish to achieve. information about alternatives and future events is incomplete. managers may have to come up with creative approaches to alternatives.

Decision Making Conditions (contd.)

Ambiguity
by far the most difficult decision situation. goals to be achieved or the problem to be solved is unclear. alternatives are difficult to define. information about outcomes is unavailable.

Conditions That Affect the Possibility of Decision Failure

Organizational Problem Low Certainty Programmed Decisions Problem Solution Possibility of Failure Risk Uncertainty High Ambiguity

Nonprogrammed Decisions

Three Decision Making Models

Political Model

Administrative Model

Classical Model

Characteristics of Classical, Administrative, and Political Decision-Making Models

Classical Model
Clear-cut problem and goals. Condition of certainty. Full information about alternatives and their outcomes. Rational choice by individual for maximizing outcomes.

Administrative Model
Vague problem and goals. Condition of uncertainty. Limited information about alternatives and their outcomes. Satisficing choice for resolving problem using intuition.

Political Model
Pluralistic; conflicting goals. Condition of uncertainty/ambiguity. Inconsistent viewpoints; ambiguous information. Bargaining and discussion among coalition members.

Six Steps in the Managerial Decision-Making Process

Business and Decision Support (continued)

 Decision Structure Structured decisions Involve situations where the procedures to be followed can be specified in advance Unstructured decisions Involve situations where it is not possible to specify most of the decision procedures in advance Semi structured decisions Some decision procedures can be specified in advance, but not enough to lead to a definite recommended decision

Decision Structure (cont) Amount of structure is typically tied to management level

Operational more structured Tactical more semi structured Strategic more unstructured

Management and Technology Implications

Improved employee effectiveness. Increased efficiency. Empowered employees. Information overload. Enhanced collaboration.

Chapter Summary
Information systems can play several strategic roles in business. The Internet, intranets, extranets, and other Internet-based technologies can be used strategically for e-business and e-commerce that provide a competitive advantage. A key strategic use of Internet technologies is to build an e-business which develops its business value by making customer value its strategic focus.

Chapter Summary (cont)

IT is a key ingredient in reengineering business operations, by enabling radical changes to business processes that dramatically improve their efficiency and effectiveness. IT can be strategically used to improve the quality of business performance. A business can use IT to help it become an agile company, that can respond quickly to changes in its environment.

Chapter Summary (cont)

Forming virtual companies has become an important competitive strategy in todays dynamic global market. Lasting competitive advantages today can only come from innovative use and management of organizational knowledge by knowledge creating companies and learning organizations.

Learning Objectives
1. 2. Explain why decision making is an important component of good management. Explain the difference between programmed and non programmed decisions and the decision characteristics of risk, uncertainty, and ambiguity. Describe the classical, administrative, and political models of decision making and their applications. Identify the six steps used in managerial decision making.

3. 4.

Learning Objectives (contd.)

5. 6. 7. 8. Explain four personal decision styles used by managers. Discuss the advantages and disadvantages of participative decision making. Identify techniques for improving decision making in todays turbulent environment. Describe the importance of information technology (IT) for organizations and the attributes of quality information.