1-1 chapter 1 why information systems matter robert riordan, carleton university
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1-1
Chapter 1
Why InformationSystems
Matter
www.pearsoned.ca/jessup
Robert Riordan, Carleton University
1-2Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Learning Objectives
1. Define and understand the term Information Systems (IS)
2. Explain the technology, people, and organizational components of Information Systems
3. Describe the types of jobs and career opportunities in Information Systems and related fields
1-3Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Learning Objectives
4. Describe the various types of Information Systems (IS)
5. Describe the dual nature of Information Systems in the success and future of modern organizations
6. Understand and plan for the future of managing IS
1-4Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Purpose of Information Systems
• Businesses use information systems– To make sound decisions– To solve problems
• Problem is any undesirable situation
• Decision arises when more than one solution to problem exists
1-5Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Purpose of Information Systems (continued)
• Problem solving and decision making require information
• Keys to success in business are– Gathering correct information– Storing information– Using information
1-6Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Data, Information, and Information Systems
• “Data”, “information” and “system” are commonly used terms
• Important to understand their similarities and differences
1-7Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Data vs. Information
• Data: a given or fact– Derived from the Latin word datum, meaning
a given fact.– Can be number, statement, or picture
• Information: facts or conclusions that have meaning within context– Composed of data that is manipulated
1-8Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Data Manipulation
• Data is manipulated to make useful information
• Survey is common method of collecting data
• Raw data is hard to read
• Information is more useful to business than data
1-9Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Generating Information
• A process is manipulation of data
• Process usually produces information
• Process may produce more data
• A piece of information in one context may be considered data in another context
1-10Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Generating Information (continued)
Figure 1.1: Input-process-output
1-11Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information in Context
• Not all information is useful
• Useful information is– Relevant– Complete– Accurate
1-12Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information in Context (continued)
• Useful information is– Current– Obtained economically (in business)
1-13Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information in Context (continued)
Figure 1.2: Characteristics of useful information
1-14Information Systems Today, 2/C/e ©2008 Pearson Education Canada
What Is a System?
• System: array of components that work together to achieve goal or goals
• System– Accepts input– Processes input– Produces output
1-15Information Systems Today, 2/C/e ©2008 Pearson Education Canada
What is a system? (continued)
• System may have multiple goals
• System may contain subsystems
• Subsystems have sub-goals that meet main goal
• Subsystems transfer output to other subsystems
1-16Information Systems Today, 2/C/e ©2008 Pearson Education Canada
What is a system? (continued)
• Closed system: has no connections with other systems
• Open system: interfaces and interacts with other systems– Often a subsystem of a bigger system
• Information system: processes data and produces information
1-17Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information and Managers
• Systems thinking: thinking of an organization in terms of subsystems
• Database: collection of electronic records• Information systems automate exchange
among subsystems• Information map: network of information
systems• Information technology: technologies
that facilitate construction and maintenance of information systems
1-18Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Benefits of Human-Computer Synergy
• Humans are relatively slow and make mistakes
• Computers cannot make decisions
• Synergy: combining resources to produce greater output
1-19Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Benefits of Human-Computer Synergy (Continued)
Figure 1.4: Qualities of humans and computers that contribute to synergy
1-20Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems in Organizations
• Computer-based Information system: system with computer at center
• Certain trends have made information systems important in business
• Organizations lag behind if they do not use information systems
1-21Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Components of information systems
Figure 1.5: Components of an information system
1-22Information Systems Today, 2/C/e ©2008 Pearson Education Canada
What are Information Systems?
- A combination of technical components - Built and used by people to collect, create, and
distribute useful data - Used typically in organizational settings but are
evolving for personal use
1-23Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems Components: Data
InformationSystems
InformationSystems
HardwareHardware TelecommunicationsTelecommunications
PeoplePeopleDataData
SoftwareSoftware
• The raw inputs for entry into information systems
• Organized, processed and stored by an IS to support user information needs
• Provides basis for qualitative/quantitative analysis
1-24Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems Components: Hardware
InformationSystems
InformationSystems
HardwareHardware TelecommunicationsTelecommunications
PeoplePeopleDataData
SoftwareSoftware
• The physical components of information systems
• Hardware components include processors, input and output devices, and storage devices (Pentium 4)
• Typical configurations based on application include micro, mid-range, mainframe, and supercomputers
1-25Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems Components: Software
InformationSystems
InformationSystems
HardwareHardware TelecommunicationsTelecommunications
PeoplePeopleDataData
SoftwareSoftware
• The instructions that operate the information system
• System software controls the hardware (e.g. Windows XP)
• Application software allows users to perform specific tasks to increase productivity (e.g. MS Word)
1-26Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems Components: Telecommunications
InformationSystems
InformationSystems
HardwareHardware TelecommunicationsTelecommunications
PeoplePeopleDataData
SoftwareSoftware
• The communication mechanism of information systems
• Allows two or more computers to communicate (Internet)
• Utilizes standard protocols for IS communication
1-27Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Society Evolution: Periods of Change
Agricultural Industrial
(Prior to 1890’s) (1890’s to 1960’s)
Informational
(1960’s to Present)
1-28Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Society Evolution: Terms and Issues
Knowledge Worker (Peter Drucker 1959)• A term invented to describe a future trend in the workforce• These will be professionals that create, modify and/or
synthesize information as a fundamental part of their job • They will require higher education levels and received higher
compensation than workers in agriculture or manufacturing• The term is still generally accepted today (Drucker was right!)
Knowledge Worker (Peter Drucker 1959)• A term invented to describe a future trend in the workforce• These will be professionals that create, modify and/or
synthesize information as a fundamental part of their job • They will require higher education levels and received higher
compensation than workers in agriculture or manufacturing• The term is still generally accepted today (Drucker was right!)
1960 2000
Information Society
1-29Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Society Evolution: Terms and Issues
Knowledge Society (Drucker - 1959)• Term invented to describe the next evolution of society• This evolution would be a result of the rise in the numbers
and importance of knowledge workers in society• Education was described as the cornerstone of the
knowledge society as it is core of the knowledge worker• Drucker was right again!
Knowledge Society (Drucker - 1959)• Term invented to describe the next evolution of society• This evolution would be a result of the rise in the numbers
and importance of knowledge workers in society• Education was described as the cornerstone of the
knowledge society as it is core of the knowledge worker• Drucker was right again!
1960 2000
Information Society
1-30Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Society Evolution: Terms and Issues
New Economy (Wired Magazine - Late 1990s)• Similar to “knowledge society” but more descriptive• Describes a society where people use their brains more
than their hands in their work and personal lives • Where communications technology and other IT systems
will create global competition for all products and services• Other names: Digital Economy, Network Era, Internet Era
New Economy (Wired Magazine - Late 1990s)• Similar to “knowledge society” but more descriptive• Describes a society where people use their brains more
than their hands in their work and personal lives • Where communications technology and other IT systems
will create global competition for all products and services• Other names: Digital Economy, Network Era, Internet Era
1960 2000
Information Society
1-31Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The New Economy (NE): Societal Perspectives
Perspective 1: Sims –Taylor• The new economy creates risks for Knowledge Workers• Knowledge workers will be the first to be replaced by
automation with information technology
Perspective 1: Sims –Taylor• The new economy creates risks for Knowledge Workers• Knowledge workers will be the first to be replaced by
automation with information technology
Perspective 2: Rikfin• The over reliance on information technology has
caused society to act hastily• The result has been a loss of perspective
Perspective 2: Rikfin• The over reliance on information technology has
caused society to act hastily• The result has been a loss of perspective
Perspective 3: THE DIGITAL DIVIDE• Those with access to information technology have
great advantages over those that don’t• IT access will further polarize society
Perspective 3: THE DIGITAL DIVIDE• Those with access to information technology have
great advantages over those that don’t• IT access will further polarize society
1-32Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Forms of Technology
Technology – any mechanical and/or electrical means to supplement, extend, or replace human manual operations Examples: building heating/cooling systems, car brakes, etc.
Information Technology – any machine technology that is controlled by or uses information for operationExample: a programmable industrial robot receiving instructions from a computer-based database
Computer- based Information Systems – any computer-based technology that provides information for use by persons or machines to make decisions or control processes Example: Software that controls CD burning hardware
1-33Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems: Turn Data into Information
Data Information• Raw material• Unformatted information• Generally has no context
Examples
• Processed material• Formatted information• Data given context
Individual time cards for factory workers entered into the payroll system
Department Labour Report, Project Status Report, Employee Payroll Checks
1-34Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information and Communication Technology Firms in Canada
1-35Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Three Distinct Competencies of IS Professionals
Technical• Knowledge of hardware, software, networking, and security • Most IS professionals are not deep technical experts but
can direct/manage others with the required technical skills
Technical• Knowledge of hardware, software, networking, and security • Most IS professionals are not deep technical experts but
can direct/manage others with the required technical skills
Business• Understand the nature of business including process,
management, social, and communication domains • Unique skills over those with only technical skills
Business• Understand the nature of business including process,
management, social, and communication domains • Unique skills over those with only technical skills
Systems• Knowledge of approaches and methods, also possess
critical thinking and problem solving skills necessary to build and integrate large information systems
• Unique skills over those with only technical skills
Systems• Knowledge of approaches and methods, also possess
critical thinking and problem solving skills necessary to build and integrate large information systems
• Unique skills over those with only technical skills
1-36Information Systems Today, 2/C/e ©2008 Pearson Education Canada
IS Impact on Organizations: New Opportunities
Post Office• Stock Forms & Publications
CRA Office• Mail Forms/Publications• Enter Tax Returns in System• Conduct Audits
CRA Hotline• Answer FAQs• Resolve Problems
CRA creates a website and allows NETFILE
Current CRA TasksPost Office• Minimal Stocking of Forms/Pubs
CRA Office• Minimal Mailing Forms/Pubs• Reduced Entry of Tax Returns• Conduct Audits (MORE!)
IRS Hotline• Reduced Answering FAQs• Resolve Problems
Modified CRA TasksNew Website
ActivateNETFILE
Implementation Results• Reduced labour costs in forms distribution, hotline support, data
entry from access to info/materials on the website and NETFILE
• Allow for redeployment of resources to primary activities including conducting audits and resolving problems
1-37Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Levels of the Organization and Traditional Systems
• Management Information Systems
• Executive Information Systems
• Decision Support Systems (both levels)
• Transaction Processing Systems
• Functional Area Information Systems (Across all levels within a function)
• Expert Systems
1-38Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Traditional Information System Functions
TransactionProcessing Systems
Management Information Systems
Executive Information Systems
Decision SupportSystems
Expert Systems
Functional Area Information Systems
Process day-to-day business event datain an organization (Operational level)
Produce detailed information to help manage a firm or part of a firm (Managerial)
Provide very high-level, aggregate informationto support decisions (Executive)
Provide analysis tools and databases to support quantitative decision making (Multiple)
Mimic human expert in a particular area and provide answers or advice (Operational)
Support the activities within a specific functional area of the firm (All)
1-39Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Other Information Systems - Not as Easy to Categorize
Office Automation System
Collaboration System
Customer Relationship Management
Electronic Commerce
Enterprise ResourcePlanning System
Support a wide range of predefined, daily work activities of individuals or groups (e.g. MS Word)
Enable people to communicate, collaborate, and coordinate with each other (e.g. email)
Support the interaction between the firm and its customers (e.g. sales force automation or call center technology)
Enable customers to buy goods and servicesfrom a firm’s website. (www.amazon.com)
Support and integrate all facets of the business (e.g. planning, manufacturing, sales, etc.)
1-40Information Systems Today, 2/C/e ©2008 Pearson Education Canada
From Recording Transactions to Providing Expertise: Types of Information Systems
• Many types of information systems
• Capabilities of applications have been combined and merged
• Management Information System: supports planning, control, and making decisions
1-41Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Transaction Processing Systems
• Most widely used type of system
• Records data collected at point where organization interacts with other parties
• Encompasses cash registers, ATMs and purchase order systems
1-42Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Supply Chain Management Systems
• Supply chain: sequence of activities involved in producing products– Activities include marketing, purchasing raw
materials, manufacturing, shipping, billing, collection, and after-sale services
• Also known as enterprise resource planning systems
1-43Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Customer Relationship Management Systems
• Customer relationship management: managing relations with customers– Used in combination with telephones to
provide customer service– Often linked to Web applications that track
online transactions
1-44Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Business Intelligence Systems
• Business Intelligence: gather data to help organization compete– Often contains statistical models– Access large pools of data
• Data warehouse: large database that usually store transactional records
1-45Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Decision Support and Expert Systems
• Decision support system: supports decision-making– Relies on models to produce tables– Extrapolates data to predict outcomes
• Expert system: supports knowledge-intensive decision-making– Uses artificial intelligence
1-46Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Geographic Information Systems
• Geographic information system: ties data to physical locations
• Represents data on a map in different formats
• May reflect demographic information in addition to geographic
• May use information from GPS satellites
1-47Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Geographic Information Systems (continued)
1-48Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Information Systems in Business Functions
• Functional business area: services within a company that support main business– Includes accounting, finance, marketing, and
human resources– Part of a larger enterprise system
1-49Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Accounting
• Information systems help record transactions
• Produce periodic statements
• Create required reports for law
• Create supplemental reports for managers
1-50Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Finance
• Finance systems facilitate financial planning and business transactions
• Tasks include organizing budgets, managing cash flow, analyzing investments, and making decisions
1-51Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Marketing
• Pinpoint likely customers and promote products
• Marketing information systems analyze demand for products in regions and demographic groups– Identify trends in demand for
products/services
• Web provides opportunity to collect marketing data
1-52Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Human Resources
• Human resource management systems aid record-keeping– Must keep accurate records– Aids recruiting, selection, placement, and
reward analysis
• Performance evaluation systems provide grading utilities
1-53Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Web Empowered Enterprises
• E-commerce: Buying and selling goods and services through Internet
• Internet is a vast network of computers connected globally
• Web has a profound impact on information systems
1-54Information Systems Today, 2/C/e ©2008 Pearson Education Canada
IS Competitive Advantage Perspectives: Who is Right?
“IT Doesn’t Matter” - Carr 2003• As IT becomes more pervasive, technology
becomes more standardized and ubiquitous• The result is that the same technologies are
available to all competitors in an industry• This produces no competitive advantage
“The Engine that Drives Success: The Best Companies have the Models Because they Have the Best IT Strategies” - Lundberg 2004
• Companies with bad business models fail regardless of IT systems or other capabilities
• Companies with good business models use IT to execute successful business models and succeed
1-55Information Systems Today, 2/C/e ©2008 Pearson Education Canada
IS for Competitive Advantage: Business Value
• Using IS to create/support business strategy is the most effective approach creating the most business value
• Strategic IS systems are typically custom built and are integrated to support the business strategy
• Strategic IS systems are by nature hard to replicate just as are good business models
1-56Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Competitive Advantage: Dual Nature of Systems
IS gone wrong(DIA)
Strategic in Nature
Established Technology
Capable Suppliers
Structured Implementation
Capable IS Support
IS that works(FedEx)Evaluation Factors
Yes
Yes
Yes
Yes
Yes
Yes
No
??
No
??
FedEx Customer Website versus
Denver International Airport Baggage System
1-57Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Organizational IT Roles
Central IT Organization• Responsible for IT Planning• Coordinates implementations• Establishes organization’s IT
methods and standards
Business Unit• Responsible for determining
IS business requirements • Supply budget and personal
resources for implementations
IT Business Unit Support• Liaison between Central
IT and the Business Unit• Spends much time onsite
at the Business Unit• Reports to both orgs
1-58Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Executive Roles in Information Technology
CEOChief Executive
Officer
COOChief Operations
Officer
CFOChief Financial
Officer
CIOChief Information
Officer
• Manages Operations• Allocates Resources• Primary Consumer of IT
within the Organization
• Manages External Stakeholder Relationships
• Sets Strategic Direction• Defines High Level IT
Needs for the Future
• Manages Accounting & Finance• Forecasts Needs and Secures
Financial Resources• Allocates Budget for IT Expenditures
1-59Information Systems Today, 2/C/e ©2008 Pearson Education Canada
Executive Roles in Information Technology
CEOChief Executive
Officer
COOChief Operations
Officer
CFOChief Financial
Officer
CIOChief Information
Officer
• Manages IT Organization and Operations• Forecasts IT Needs from Business Strategy• Sets Direction for IT Architecture and Organization• Plans, Designs and Delivers IT throughout the firm
1-60Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Future of Information Systems: Trends
Ownership and Control (Old School IS)• Large backlogs of user requests…very poor service• Arrogance and feeling of ownership and control of IT• Can’t do attitude…told users why they couldn’t do things• Resulted in a very poor relationship with users
Consulting and Service Mentality (New School IS)• IS is taking on an IT consulting role• “Service Mentality”…users are customers to be served• Proactively support and problem solve for their customers• Fundamentally believe that customers own the technology
• Business managers became technology savvy • Systems evolved and became easier to develop• Business organizations developed their own systems
THEN
1-61Information Systems Today, 2/C/e ©2008 Pearson Education Canada
IS Role in Change: Trends and Terms
Downsizing (Sometimes called Rightsizing)• Reducing organizational headcount to meet the financial goals of the organization
• IS is viewed as the lever to provide the systems necessary to increase productivity
Downsizing (Sometimes called Rightsizing)• Reducing organizational headcount to meet the financial goals of the organization
• IS is viewed as the lever to provide the systems necessary to increase productivity
Outsourcing• Transferring business functions outside the organization to increase service levels and/or reduce operating cost
• IS is not immune to this trend. Certain commodity IS technical jobs will be increasingly transferred overseas
• IS must find better methods to manage offshore work
Outsourcing• Transferring business functions outside the organization to increase service levels and/or reduce operating cost
• IS is not immune to this trend. Certain commodity IS technical jobs will be increasingly transferred overseas
• IS must find better methods to manage offshore work
1-62Information Systems Today, 2/C/e ©2008 Pearson Education Canada
The Future for IS
Characteristics for success include: continuous learning and growth, finding new ways to add value, flexibility, and developing unique skills
IS needs will continue to grow as technology developments advance
Although outsourcing will continue, there will be strong demand for IS professionals
There is a need for personnel that can speak the language of technology and business and the skills to manage projects and people