PPT ch01

Management Information Systems,
Sixth Edition
Chapter 1
Business Information Systems:
An Overview
Objectives
Explain why information technology matters
Define digital information and explain why digital
systems are so powerful and useful
Explain why information systems are essential to
business
Describe how computers process data into useful
information for problem solving and decision
making
Identify the functions of different types of
information systems in business
Management Information Systems, Sixth Edition
Objectives (continued)
Describe careers in information technology
Identify major ethical and societal concerns
created by widespread use of information
technology
Does Information Technology Matter?

Hackett Group study: Does IT Matter? Hackett
Concludes the Answer is Yes
Worlds best performing companies spent 7%
more per employee on IT than typical companies
They recouped the investment fivefold in lower
operational costs
Todays business professionals must know how

to develop and use IT
The Power of Digital Systems

Binary counting system uses only two digits:
0 and 1
Digital systems:
Computers and devices that use the binary
system
Can represent any information as a combination
of zeros and ones
Information can be represented, stored,

communicated, and processed digitally
The Power of Digital Systems

(continued)
Digital information is stored and communicated
by means of electromagnetic signals
Extremely fast
Digital copy is an exact copy of the original
Accuracy and speed make digital systems

powerful, useful, and important
The Purpose of Information Systems

Businesses use information systems
To make sound decisions
To solve problems
Problem: any undesirable situation

Decision: arises when more than one solution to
problem exists
Both problem solving and decision making
require information
The Purpose of Information Systems

(continued)
Keys to success in business:
Gathering correct information efficiently
Storing information
Using information
Purpose of information systems is to support

these activities
Data, Information,
and Information Systems
Data, information, and system are
commonly used terms
Important to understand their similarities and
differences
Data vs. Information

Data: a given or fact
Can be number, statement, or picture
Is the raw material in the production of
information
Information: facts or conclusions that have

meaning within context
Composed of data that has been manipulated
10
Data Manipulation
Data is manipulated to make useful information
New information can be generated from data,
such as averages, trends, etc.
Survey is common method of collecting data

Raw data is hard to read
Information is more useful to business than data
11
Generating Information
Process: the manipulation of data
Usually produces information
May produce more data
A piece of information (output of a process) in

one context may be considered data (input to a
process) in another context
12
Generating Information (continued)
13
Information in Context
Not all information is useful
To be useful, information must be:
Relevant
Complete
Accurate
In business, information must also be:

Current
Obtained in a cost-effective manner
14
Information in Context (continued)
15
What Is a System?
System: array of components that work together
to achieve goal or goals
System
Accepts input
Processes input
Produces output
16
What is a System? (continued)
System may have multiple goals

System may contain subsystems
Subsystem: component of a larger system
Subsystems have subgoals that contribute to
main goal
Subsystems can receive input from and transfer
output to other subsystems
17
18

Closed system: has no connections with other
systems
Open system: interfaces and interacts with
other systems
Often a subsystem of a bigger system
Subsystems by definition are always open
Information system (IS): components that work

together to process data and produce
information
19
Information and Managers

Systems thinking: thinking of an organization in
terms of subsystems
Powerful management approach that creates a
framework for problem solving and decision
making
Helps keep managers focused on overall goals
Database: collection of electronic records

Information systems automate exchange of
information among subsystems
20
Information and Managers (continued)

Information map: description of data and
information flow within an organization
Shows a network of information subsystems that
exchange information with each other and with
the outside world
Information technology: technologies that

facilitate construction and maintenance of
information systems
21
The Benefits of
Human-Computer Synergy
Humans are relatively slow and make mistakes
Computers cannot make decisions unless
programmed to do so
Synergy: combining resources to produce
output that exceeds the sum of outputs of the
separate resources by themselves
Human-computer combination allows human
thought to be translated into efficient processing
of data
22
The Benefits of
Human-Computer Synergy (continued)
23
Information Systems in Organizations

Information system consists of data, hardware,
software, telecommunications, people, and
procedures
Computer-based Information system: system
with one or more computers at center
Organizations lag behind and lose
competitiveness if they do not use information
systems
24

(continued)
Trends that have made information systems important
in business:
Growing power and decreasing cost of computers
Growing capacity and decreasing costs of data storage
devices
Increasing variety and ingenuity of computer programs
Available, reliable, affordable, and fast communications
links to the Internet
Growth of the Internet
Increasing computer literacy of the workforce
25

(continued)
26
The Four Stages of Processing

Input: collect and introduce data to system
Transaction: a business event, usually entered
as input
Transaction processing system (TPS): a
system that records transactions
Input devices include keyboards, bar code
readers, voice recognition systems, touch
screens
Data processing: perform calculations on input

27
The Four Stages of Processing

(continued)
Output: what is produced by the information
system
Output devices include printers and speakers
Storage: maintaining vast amounts of data

Storage devices include optical discs
28
Computer Equipment
for Information Systems
Different technologies are used to support the
four data processing functions:
Input devices: receive input

Computers: process data
Output devices: display information
Storage devices: store data
Network devices: transfer data
Telecommunications: communication that takes

place between computers over great distances
29
Computer Equipment
for Information Systems (continued)
30
From Recording Transactions to

Providing Expertise:
Types of Information Systems
Different types of information systems serve
different functions
Capabilities of applications have been combined
and merged
Management Information System: a system
that supports planning, control, and making
decisions
31
Transaction Processing Systems

Transaction processing system (TPS): most
widely used type of system
Records data collected at point where
organization transacts business with other parties
Point-of-sale machines: record sales

Include cash registers, ATMs, and purchase order
systems
32
Supply Chain Management Systems

Supply chain: sequence of activities involved in
producing and selling products or services
For products, activities include marketing,
purchasing raw materials, manufacturing and
assembly, packing and shipping, billing,
collection, and after-sale services
For services, activities include marketing,
document management, and monitoring
customer portfolios
33
Supply Chain Management Systems

(continued)
Supply chain management (SCM) systems:
systems that support these activities
Also known as enterprise resource planning
systems
SCM systems eliminate the need to reenter data
that was captured elsewhere in the organization
An SCM is an enterprise application
34
Customer Relationship
Management Systems
Customer relationship management (CRM)
systems: systems for managing relations with
customers
Used in combination with telephones to provide
customer service
Often linked to Web applications that track online
transactions
Retaining loyal customers is less expensive than

acquiring new ones
35
Business Intelligence Systems

Business intelligence (BI) systems: systems
that glean relationships and trends from raw
data to help organization compete
Often contain statistical models
Access large pools of data
Data warehouse: large database that usually

store transactional records
36
Decision Support and Expert Systems

Decision support system (DSS): supports
decision making
Relies on models to produce tables
Extrapolates data to predict outcomes
Helps answer What if? questions
Expert system (ES): supports knowledgeintensive decision making

Uses artificial intelligence techniques
Can preserve the knowledge of retiring experts
37
Geographic Information Systems

Geographic information system (GIS): ties
data to physical locations
Represents data on a map in different formats
May reflect demographic information in addition
to geographic information
May use information from global positioning
system (GPS) satellites
Examples: Google Earth, Mapquest
38
Geographic Information Systems

(continued)
39
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
40
Accounting
Accounting information systems:
Help record transactions

Produce periodic statements
Create required reports for law
Create supplemental reports for managers
Contain controls to guarantee adherence to
standards
41
Finance
Finance systems:
Facilitate financial planning and business
transactions
Tasks include organizing budgets, managing

cash flow, analyzing investments, and making
decisions
42
Marketing
Marketings purpose is to 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
Help analyze how advertising campaigns affect
profit
Web provides opportunity to collect marketing data

as well as promote products and services
43
Human Resources
Human resource management systems aid
record-keeping
Must keep accurate records
Aids recruiting, selection, placement, benefits
analysis, requirement projections
Performance evaluation systems provide

grading utilities
44
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
An emerging advertising medium
A place to conduct e-commerce
45
Careers in Information Systems

Information technology professionals are
increasingly in demand
Network administrator, system administrator,
system analyst, software engineering, data
communications analyst, and database
administrator jobs are increasing in demand
46
Help Desk Technician

Help desk technician:
Supports end users in their daily use of IT
Often provides help via telephone
May use software that gives them control of the
users PC
May need to have knowledge of a wide variety of
PC applications
47
Systems Analyst
Systems analyst:
Researches, plans, and recommends software and
systems choices
Responsible for developing cost analyses, design
considerations, implementation timelines, and
feasibility studies
Involves analyzing system requirements,

documenting development efforts, and providing
specifications for programmers
Requires communication and presentation skills
48
Database Administrator
Database administrator (DBA): responsible for
databases and data warehouses
Develops and acquires database applications
Must adhere to federal, state, and corporate
regulations to protect privacy of customers and
employees
Responsible for securing the database
49
Network Administrator
Network administrator: acquires, implements,
manages, maintains, and troubleshoots
networks
Implements security
Firewalls
Access codes
50
System Administrator
System administrator: manages an
organizations computer operating systems
Must ensure that operating systems work
together, support business requirements, and
function properly
Responsible for backup and recovery, adding and
deleting user accounts, performing system
upgrades
51
Webmaster
Webmaster: creates and maintains Web site
Must be familiar with Web transaction software,
payment-processing software, security software
Manages both the intranet and extranet
Demand for Webmasters grows as more

businesses use Web
52
Chief Security Officer

Chief security officer (CSO): supervises
security of information system
Position exists due to growing threat to
information security
Usually reports to chief information officer (CIO)
53
Chief Information Officer and

Chief Technology Officer
Chief information officer (CIO): responsible for
all aspects of information system
Often a corporate vice president
Must have technical understanding of information
technologies as well as business knowledge
Chief technology officer (CTO): has similar

duties as CIO
54
Chief Information Officer and

Chief Technology Officer (continued)
55
Summary
Computer-based information systems pervade
almost every aspect of our lives
A system is a set of components that work
together to achieve a common goal
Subsystem: a system performs a limited task
that produces an end result, which must be
combined with other products from other
systems to reach an ultimate goal
Data processing has four stages
56
Summary (continued)
Any IS that helps in management is a
management information system (MIS)
Many different types of MIS
Enterprise application systems (SCM or ERP) tie
together different functional areas of a business
ISs are used in many business functions,
including accounting, finance, marketing, and
human resources
57
Summary (continued)
The job prospects for IT professionals are bright
IT has created societal concerns regarding
privacy, identity theft, spam, and Web
annoyances
58

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Management Information Systems,

Management Information Systems, Sixth Edition

Does Information Technology Matter?

Todays business professionals must know how

Management Information Systems, Sixth Edition

The Power of Digital Systems

Information can be represented, stored,

The Power of Digital Systems

Accuracy and speed make digital systems

Management Information Systems, Sixth Edition

The Purpose of Information Systems

Problem: any undesirable situation

Management Information Systems, Sixth Edition

The Purpose of Information Systems

Purpose of information systems is to support

Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Data vs. Information

Information: facts or conclusions that have

Management Information Systems, Sixth Edition

Survey is common method of collecting data

Management Information Systems, Sixth Edition

A piece of information (output of a process) in

Management Information Systems, Sixth Edition

Generating Information (continued)

Management Information Systems, Sixth Edition

In business, information must also be:

Management Information Systems, Sixth Edition

Information in Context (continued)

Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

What is a System? (continued)

System may have multiple goals

Management Information Systems, Sixth Edition

What is a System? (continued)

Management Information Systems, Sixth Edition

What is a System? (continued)

Information system (IS): components that work

Information and Managers

Database: collection of electronic records

Management Information Systems, Sixth Edition

Information and Managers (continued)

Information technology: technologies that

Management Information Systems, Sixth Edition

Management Information Systems, Sixth Edition

Information Systems in Organizations

Management Information Systems, Sixth Edition

Information Systems in Organizations

Information Systems in Organizations

Management Information Systems, Sixth Edition

The Four Stages of Processing

Data processing: perform calculations on input

The Four Stages of Processing

Storage: maintaining vast amounts of data

Management Information Systems, Sixth Edition

Input devices: receive input

Telecommunications: communication that takes

Management Information Systems, Sixth Edition

From Recording Transactions to

Management Information Systems, Sixth Edition

Transaction Processing Systems

Point-of-sale machines: record sales

Management Information Systems, Sixth Edition