Foundations Foundations of Information Systemsof Information Systems

in Businessin Business

Syafrizal HelmiSyafrizal Helmi

Explain why knowledge of information Explain why knowledge of information systems is important for business systems is important for business professionals and identify five areas of professionals and identify five areas of information systems knowledge they need.information systems knowledge they need.

Chapter ObjectivesChapter Objectives

An IS Framework for Business An IS Framework for Business ProfessionalsProfessionals

Give examples to illustrate how Give examples to illustrate how electronic business, electronic electronic business, electronic commerce, or enterprise collaboration commerce, or enterprise collaboration systems could support a firm’s systems could support a firm’s business processes, managerial business processes, managerial decision making, and strategies for decision making, and strategies for competitive advantage.competitive advantage.

Provide examples of the components of Provide examples of the components of real world information systems. real world information systems. Illustrate that in an information system, Illustrate that in an information system, people use hardware, software, data, people use hardware, software, data, and networks as resources to perform and networks as resources to perform input, processing, output, storage, and input, processing, output, storage, and control activities that transform data control activities that transform data resources into information products.resources into information products.

Chapter ObjectivesChapter Objectives

Provide examples of several major Provide examples of several major types of information systems from your types of information systems from your experiences with business experiences with business organizations in the real world.organizations in the real world.

Identify several challenges that a Identify several challenges that a business manager might face in business manager might face in managing the successful and ethical managing the successful and ethical development and use of information development and use of information technology in a business.technology in a business.

Chapter ObjectivesChapter Objectives

• Capital managementCapital management

• Foundation of doing businessFoundation of doing business

• ProductivityProductivity

• Strategic opportunity and advantageStrategic opportunity and advantage

There are four reasons why IT makes a difference to the There are four reasons why IT makes a difference to the success of a business:success of a business:

• IT is the largest single component of capital investment in the world

• The success of your business in the future may well depend on how you make IT investment decisions.

Capital Management: Capital Management:

Information Technology Capital Investment Information Technology Capital Investment

Figure 1-1

Source: Based on the data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and Product Accounts, Tables 5.2 and 5.8, 2004.

Most businesses today could not Most businesses today could not operate without extensive use of operate without extensive use of information systems and information systems and technologies. technologies.

Foundation ITFoundation IT

Using IT to Growth Using IT to Growth businessbusiness

• IT is vital to the IT is vital to the development of development of new products. new products.

IT can IT can increase increase market share.market share.

IT can help a IT can help a business become business become a high-quality, a high-quality, low-cost low-cost producerproducer

The Interdependence between Organizations andThe Interdependence between Organizations andInformation Systems Information Systems

Figure 1-2

Productivity

IT is one of the most important tools managers have to increase productivity and efficiency of businesses

IT Increase ProductivityIT Increase Productivity

Strategic Opportunity and Advantage:

Create competitive advantage: IT makes it possible to develop competitive advantages.

• Differentiate yourself from your competitors: Amazon has become the largest book retailer in the United States on the strength of its huge online inventory and recommender system. It has no rivals in size and scope.

Strategic Opportunity and Advantage:

• Create new services: eBay has developed the largest auction trading platform for millions of individuals and businesses. Competitors have not been able to imitate its success.

New Business Models: Dell Computer has built its competitive advantage on an IT enabled build-to-order business model that other firms have not been able to imitate.

1.Internet growth and technology convergence : Growth in e-business, e-commerce, and e-government, eTrade.com, making many traditional business models obsolete: the corner music store and video store.

Growing impact of IT in business firms can be assessed from the following five factors:

2. Transformation of the business enterprise : Flattening, Decentralization, Flexibility, Location independence, Low transaction and coordination costs, Empowerment, Collaborative work and teamwork

3. Growth of a globally connected economy : : Management and control in a global marketplace, Competition in world markets, Global workgroups, Global delivery systems

4. Growth of knowledge and information-base economies : Knowledge and information-based economies, New products and services, Knowledge as a central productive and strategic asset, Time-based competition, Shorter product life, Turbulent environment, Limited employee knowledge base

Emergence of the digital firm : Digitally enabled relationships with customers, suppliers, and employees, Core business processes accomplished using digital networks, Digital management of key corporate assets

InformationSystems

Resources

PeopleS

oftw

areH

ard

war

e

Networks Data

Components of an Information SystemComponents of an Information System

What is an Information What is an Information System?System?

Input ofData

Resources

Input ofData

Resources

Processing Data

Processing Data

Output ofInformation

Products

Output ofInformation

Products

Control of System PerformanceControl of System Performance

Storage of Data ResourcesStorage of Data Resources

What is a System?What is a System?

ManufacturingProcess

Input ofRaw Materials

Output ofFinished Products

Environment

Other Systems

Control byManagement

ControlSignals

ControlSignals

FeedbackSignals

FeedbackSignals

System Boundary

Components of an Information SystemComponents of an Information System

Functions of an Information System

Attributes of Information Attributes of Information QualityQuality

Information Systems Are More than Computers

Penggunaan SI secara efektif Penggunaan SI secara efektif membutuhkan pemahaman dari membutuhkan pemahaman dari organisasi, manajemen, dan IT yang organisasi, manajemen, dan IT yang membentuk sistem tersebut.membentuk sistem tersebut.

Major Roles of Information Major Roles of Information SystemsSystems

Support Strategies for

Competitive Advantage

SupportBusiness Decision Making

Support Business Processes and Operations

The Business Information Value Chain

Figure 1-7

The e-Business EnterpriseThe e-Business Enterprise

Manufacturingand

Production

Engineering &Research

Accounting,and Finance

Suppliers and Other Business Partners

Supply Chain ManagementProcurement, Distribution, and Logistics

Customer Relationship ManagementMarketing Sales Customer Service

Consumer and Business Customers

Company

Boundary

Intranets

The Internet

Extranets

Ext

ran

ets

History of the role of Information History of the role of Information SystemsSystems

Data Processing

ManagementReporting

DecisionSupport

Strategic &End User

Electronic Commerce

1950-1960 1960-1970 1970-1980 1980-1990 1990-2000

ElectronicData Processing- TPS

ManagementInformationSystems

DecisionSupportSystems- Ad hoc Reports

End UserComputingExec Info SysExpert SystemsSIS

ElectronicBusiness & Commerce-InternetworkedE-Business &Commerce

Types of Information Types of Information SystemsSystems

Transaction

Processing

Systems

Process

Control

Systems

Enterprise

Collaboration

Systems

Operations

Support

Systems

Management

Information

Systems

Decision

Support

Systems

Executive

Information

Systems

Management

Support

Systems

Information Systems

Other Categories of Other Categories of Information SystemsInformation SystemsExpert SystemsExpert Systems

Knowledge Management SystemsKnowledge Management Systems

Functional Business SystemsFunctional Business Systems

Strategic Information SystemsStrategic Information Systems

Cross-Functional Information SystemsCross-Functional Information Systems

The Information Systems The Information Systems Development ProcessDevelopment Process

Management Challenges of the E-business Management Challenges of the E-business EnterpriseEnterprise

•Business Strategies•Business Processes•Business Needs

•Customer Relationships•Business Partners•Suppliers•Business Customers

Ethical ConsiderationsPotential Risks?Potential Laws? Possible Responses?

•IS Human Resources•IS Development

•IT Infrastructure•IS Performance

•Organization Structure•and Culture•User Acceptance

Types of Information Systems

Major Types of Systems

• Transaction Processing Systems (TPS)

• Management Information Systems (MIS)

• Decision-Support Systems (DSS)

• Executive Support Systems (ESS)

Transaction Processing Systems

(TPS)

A Symbolic Representation for a Payroll TPS

Management Information SystemsManagement Information SystemsChapter 2 Information Systems in the EnterpriseChapter 2 Information Systems in the Enterprise

MAJOR TYPES OF SYSTEMS IN ORGANIZATIONS

Typical Applications of TPS

Management Information Systems

(MIS)

Management Information Systems (MIS)

Management level

• Inputs: High volume transaction level data

• Processing: Simple models

• Outputs: Summary reports

• Users: Middle managers

Example: Annual budgeting

Management Information Systems (MIS)

Management Information Systems (MIS) (continued)

Figure 2-6

A sample MIS report

Decision-Support Systems (DSS)

Decision-Support Systems (DSS)

Management level

• Inputs: Transaction level data

• Processing: Interactive

• Outputs: Decision analysis

• Users: Professionals, staff

Example: Contract cost analysis

Decision-Support Systems (DSS) (Continued)

Voyage-estimating decision-support system

Executive Support Systems (ESS)

EXECUTIVE SUPPORT SYSTEMS (ESS):

• Inputs: Aggregate data

• Processing: Interactive

• Outputs: Projections

• Users: Senior managers

Example: 5 year operating plan

Model of a Typical Executive Support System

Figure 2-8

Figure 2-2

Relationship of Systems to One Another

Traditional View of Systems

Enterprise Systems

Thanks for your Thanks for your AttentionAttention

Sources : Kenneth C Loudon & Jane Sources : Kenneth C Loudon & Jane P Loudon, Management Information P Loudon, Management Information System, managing the digitAL firm, System, managing the digitAL firm,