CHAPTER - 1 - Information Management.pptx

UNIT 1
INFORMATION SYSTEMS IN
NETWORKING
ENTERPRISE
1.1 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall
Video Cases:
Case 1 UPS Global Operations with the DIAD IV
Case 2 IBM, Cisco, Google: Global Warming by Computer
Instructional Videos:
Instructional Video 1 Green Energy Efficiency in a Data Center Using TivoliArchitecture (IBM)
Instructional Video 2 T
our IBM’s Raleigh Data Center

STUDENT LEARNING OBJECTIVES
Essentials of Management Information Systems
Chapter 1 Business Information Systems in Your Career
• How are information systems transforming
business and what is their relationship to
globalization?
• Why are information systems so essential for
running and managing a business today?
• What exactly is an information system? How does
it work? What are its people, organization, and
technology components?

• How will a four-step method for business problem
solving help you solve information system-
related problems?
• How will information systems affect business
careers and what information systems skills and
knowledge are essential?

The Role of Information Systems in Business Today
How Information Systems Are Transforming Business
• In 2011, more than 131 million businesses had dot-
com addresses registered.
• More than 106 million people receive their news
online; 74 million Americans read blogs.
• Internet advertising continues to grow at around 14
percent per year.
• New laws require businesses to store more data for
longer periods.
• Changes in business result in changes in jobs and
careers.

What’s New in MIS?
New technologies
Cloud computing
Software as a service (SaaS)
Mobile digital platform
People and behavior changes
Managers use social networks, collaboration
Business intelligence applications accelerate
Virtual meetings are accepted and used
Organizations
Web 2.0 applications widely adopted
Telework gains momentum
Co-creation of value, collaboration across firms

Interactive Session: Organizations
Running a Business from the Palm of Your Hand
• Read the Interactive Session and then discuss the
following questions:
• What kinds of applications are described in the case? What
business functions do they support? How do they improve
operational efficiency and decision making?
• Identify the problems that businesses in this case study solved
by using mobile digital devices.
• What kinds of businesses are most likely to benefit from
equipping their employees with mobile digital devices such as
iPhones, iPads, and BlackBerrys?
• Discuss the implications of this statement: “The iPhone is not a
game changer, it’s an industry changer.”

Globalization Challenges and Opportunities:
A Flattened World
• Internet and global communications have greatly
reduced economic and cultural advantages of
developed countries.
• Drastic reduction of costs of operating and transacting on
global scale
• Competition for jobs, markets, resources, ideas
• Dependence on imports and exports
• Requires new understandings of skills, markets,
opportunities

Business Drivers of Information Systems
• Businesses invest in IT to achieve six
important business objectives.
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival

Operational Excellence:
• Improved efficiency results in higher profits.
• Information systems and technologies help
improve efficiency and productivity.
 E.g., Walmart
• Power of combining information systems and best
business practices to achieve operational efficiency—
over $405 billion in sales in 2010
• Most efficient store in world as result of digital links
between suppliers and stores

New Products, Services, and Business Models:
• Information systems and technologies enable firms to
create new products, services, and business models.
• Business model: how a company produces, delivers,
and sells its products and services
• E.g., Apple
• Transformed old model of music distribution with
iTunes
• Constant innovations—iPod, iPhone, iPad, etc.

New Products, Services, and Business Models:
With multitouch displays,
Internet browsing, document
management, cameras, and
messaging capabilities,
Apple’s iPhone and iPad
have created new platforms
for mobile business
computing

Customer and Supplier Intimacy:
• Customers who are served well become repeat
customers who purchase more.
• Mandarin Oriental hotel
• Uses IT to foster an intimate relationship with its
customers, keeping track of preferences, and so on
• Close relationships with suppliers result in lower
costs.
• JCPenney
• IT to enhance relationship with supplier in Hong Kong

Improved Decision Making:
• If managers rely on forecasts, best guesses,
and luck, they will misallocate employees,
services, and inventory.
• Real-time data improves ability of managers to
make decisions.
• Verizon: Web-based digital dashboard to
update managers with real-time data on
customer complaints, network performance,
and line outages

Transpara’s Mobile
Dashboard delivers
comprehensive and
accurate information for
decision making. The
graphical overview of
key performance
indicators helps
managers quickly
spot areas that need
attention.

Competitive Advantage:
• Often results from achieving previous business
objectives
• Advantages over competitors:
• Charging less for superior products, better
performance, and better response to suppliers and
customers
• E.g., Apple, Walmart, UPS are industry leaders
because they know how to use information systems
for this purpose

Survival:
• Businesses may need to invest in information
systems out of necessity; simply the cost of doing
business.
• Keeping up with competitors
• Citibank’s introduction of ATMs
• Federal and state regulations and reporting
requirements
• Toxic Substances Control Act and the
Sarbanes–Oxley Act

Perspectives on Information Systems and Information Technology
What Is an Information System?
• Information technology: the hardware and software a
business uses to achieve objectives.
• Information system: interrelated components that
manage information to:
• Support decision making and control
• Help with analysis, visualization, and product creation
• Data: streams of raw facts.
• Information: data shaped into meaningful, useful form.

Data and Information
Raw data from a supermarket checkout counter can be processed and organized to
produce meaningful information, such as the total unit sales of dish detergent or the
total sales revenue from dish detergent for a specific store or sales territory.
Figure 1-1
Data and Information

What Is an Information System?
• Activities in an information system that produce
information:
• Input
• Processing
• Output
• Feedback
• Sharp distinction between computer or computer
program versus information system

Figure 1-2
It Isn’t Simply Technology: The Role of People and Organizations
Functions of an Information System
An information system contains
information about an
organization and its surrounding
environment. Three basic
activities—input, processing, and
output—produce the information
organizations need. Feedback is
output returned to appropriate
people or activities in the
organization to evaluate and
refine the input. Environmental
actors, such as customers,
suppliers, competitors,
stockholders, and regulatory
agencies, interact with the
organization and its information
systems.

The Role of People and Organizations
• Information systems literacy
• Includes behavioral and technical approach
• Computer literacy
• Focuses mostly on knowledge of IT
• Management information systems (MIS)
• Focuses on broader information systems literacy
• Issues surrounding development, use, impact of
information systems used by managers and
employees

Information Systems Are More than Computers
Figure 1-3
Using information systems
effectively requires an
understanding of the
organization, people, and
information technology
shaping the systems. An
information system
provides a solution to
important business
problems or challenges
facing the firm.

Dimensions of Information Systems
• Organizations
• Coordinate work through structured hierarchy
and business processes
• Business processes: related tasks and behaviors for
accomplishing work
• E.g., fulfilling an order, hiring an employee
• May be informal or include formal rules
• Culture embedded in information systems
• E.g., UPS’s concern with placing service to customer first

• People
• Information systems require skilled people to build,
maintain, and use them.
• Employee attitudes affect ability to use systems
productively.
• Role of managers
• Perceive business challenges
• Set organizational strategy
• Allocate human and financial resources
• Creative work: new products, services

• Technology
• IT Infrastructure: foundation or platform that
information systems built on
• Computer hardware
• Computer software
• Data management technology
• Networking and telecommunications technology
• Internet and Web, extranets, intranets
• Voice, video communications

Interactive Session: Technology
UPS Competes Globally with Information Technology
Using a handheld
computer called a Delivery
Information Acquisition
Device (DIAD), UPS
drivers automatically
capture customers’
signatures along with
pickup, delivery, and time
card information. UPS
information systems use
these data to track
packages while they are
being transported.

UPS Competes Globally with Information Technology
• What are the inputs, processing, and outputs of UPS’s
package tracking system?
• What technologies are used?
• How are these technologies related to UPS’s business
strategy?
• What business objectives do these systems address?
• What would happen if these technologies were not
available?

Understanding Information Systems: A Business Problem-Solving Approach
The Problem-Solving Approach
• Few business problems are simple or
straightforward.
• Most business problems involve a number of major
factors that can fall into three main categories:
• Organization
• Technology
• People

• Problem solving: four-step process
1. Problem identification
2. Solution design
3. Choice
4. Implementation
A Model of the Problem-Solving Process

1. Problem identification includes:
• Agreement that problem exists
• Definition of problem
• Causes of problem
• What can be done given resources of firm

• Typical organizational problems
• Outdated business processes
• Unsupportive culture and attitudes
• Political in-fighting
• Turbulent business environment, change
• Complexity of task
• Inadequate resources

• Typical technology problems
• Insufficient or aging hardware
• Outdated software
• Inadequate database capacity
• Insufficient telecommunications capacity
• Incompatibility of old systems with new technology
• Rapid technological change

• Typical people problems
• Lack of employee training
• Difficulties of evaluating performance
• Legal and regulatory compliance
• Work environment, ergonomics
• Poor or indecisive management
• Lack of employee support and participation

2. Solution design
• Often many possible solutions
• Consider as many as possible to understand range
of solutions
3. Choice: Factors include
• Cost
• Feasibility given resources and skills
• Length of time needed to implement solution

4. Implementation
• Building or purchasing solution
• Testing solution, employee training
• Change management
• Measurement of outcomes
• Feedback, evaluation of solution
• Problem solving is a continuous process, not a
single event
• Sometimes chosen solution doesn’t work or needs
adjustment

Problem Solving Is a Continuous Four-Step Process
Figure 1-4
During implementation and
thereafter, the outcome
must be continually
measured and the
information about how well
the solution is working is
fed back to the problem
solvers. In this way, the
identification of the
problem can change over
time, solutions can be
changed, and new choices
made, all based on
experience.

The Role of Critical Thinking in Problem Solving
• Without critical thinking, easy to jump to
conclusions, misjudge a problem, and waste
resources
• Critical thinking:
• Sustained suspension of judgment with an
awareness of multiple perspectives and
alternatives

The Role of Critical Thinking in Problem Solving
• Four elements of critical thinking:
1. Maintaining doubt and suspending judgment
2. Being aware of different perspectives
• Including technology, organization, and people
perspectives
3. Testing alternatives and letting experience guide
4. Being aware of organizational and personal limitations

The Connection Between Business Objectives,
Problems, and Solutions
• When firms cannot achieve business objectives
these objectives become challenges.
• Information systems often present solutions,
partially or fully, to these challenges.

• Success in today’s job market requires a broad set
of skills.
• Job candidates must have problem-solving skills as
well as technical skills so that they can complete
specific tasks.
Information Systems and Your Career

How Information Systems Will Affect Business Careers
• Accounting:
• Accountants increasingly rely on information systems to
summarize transactions, create financial records, organize
data, and perform financial analysis.
• Skills:
• Knowledge of databases and networks
• Online financial transactions and reporting systems
• How systems are used to achieve accounting
functions

• Finance:
• Relationship between information systems and financial
management and services is so strong that many advise
finance majors to co-major in information systems.
• Skills:
• Use systems for financial reporting, direct investment
activities, implement cash management strategies
• Plan, organize, implement information systems
strategies for the firm

• Marketing:
• No field has undergone more technology-driven change in
the past five years than marketing and advertising.
• Skills:
• Work with databases for tracking and reporting on
customer behavior, product performance, customer
feedback, product development
• Enterprise systems for product management, sales force
management, customer relationship management

• Operations management in services and
manufacturing:
• Production managers, administrative service managers, and
operations analysts
• Skills:
• Hardware and software platforms for operations
management
• Use database and analytical software for coordinating
and optimizing resources required for producing goods
and services

• Management:
• The job of management has been transformed
by information systems.
• Impossible to manage business today without
information systems.
• Skills:
• Use of information systems for each function of job,
from desktop productivity tools to applications
coordinating the entire enterprise

The job of management
requires extensive use
of information systems
to support decision
making and to monitor
the performance of the
firm.

• Information systems:
• Fast changing and dynamic profession because information
technologies are among most important tools for achieving
business firms’ key objectives
• Domestic and offshore outsourcing
• Skills:
• Uses of new and emerging hardware and software to
achieve six business objectives
• An ability to take a leadership role in the design and
implementation of new information systems

• Common requirements
• How IT helps achieve six business objectives
• Central role of databases
• Business analytics and intelligence systems
• Working with specialists and systems
designers
• Ethical, social, legal environment and issues
• Use of IT to meet legal requirements

Global E-Business
and Collaboration
Video Cases:
Case 1 How FedEx Works: Enterprise Systems
Case 2 IT and Geo-Mapping Help a Small Business Succeed
Instructional Videos:
Instructional Video 1 US Foodservice Grows Market with Oracle CRM on Demand
Instructional Video 2 Comverse One Billing and Active Customer Management
Instructional Video 3 Deliver Field Service Excellence

Chapter 2 Global E-Business and Collaboration
• What are the major features of a business that are
important for understanding the role of
information systems?
• How do systems serve different management
groups in a business?
• How do systems that link the enterprise improve
organizational performance?

• Why are systems for collaboration and teamwork
so important and what technologies do they use?
• What is the role of the information systems
function in a business?

America’s Cup 2010: USA Wins with Information Technology
• Problem: Using IT to
win the America’s
Cup race
• Solutions: New
technology for
physical engineering
of boat; sensor
network to monitor
conditions, and data
analysis to improve
the performance of
sails and more

• IBM Oracle Database 11g data management
software provided real time analysis of boat’s
sensor data
• Demonstrates IT’s role in fostering innovation
and improving performance
• Illustrates the benefits of using data analysis
and IT to improve products

Components of a Business
Business: formal organization that makes products or
provides a service in order to make a profit
Organizing a Business: Basic Business Functions
• Four basic business functions
• Manufacturing and production
• Sales and marketing
• Finance and accounting
• Human resources

Figure 2-1
Every business, regardless of its
size, must perform four functions
to succeed. It must produce the
product or service; market and sell
the product; keep track of
accounting and financial
transactions; and perform basic
human resources tasks, such as
hiring and retaining employees.
The Four Major Functions of a Business

• Suppliers
• Customers
• Employees
• Invoices/payments
• Products and services
Five Basic Business Entities

Business Processes
• Logically related set of tasks that define how
specific business tasks are performed
• The tasks each employee performs, in what order, and on what
schedule
• E.g., steps in hiring an employee
• Some processes tied to functional area
• Sales and marketing: identifying customers
• Some processes are cross-functional
• Fulfilling customer order

Figure 2-2
Fulfilling a customer order
involves a complex set of
steps that requires the
close coordination of the
sales, accounting, and
manufacturing functions.
The Order Fulfillment Process

Managing a Business and Firm Hierarchies
• Firms coordinate work of employees by developing
hierarchy in which authority is concentrated at top.
 Senior management
 Middle management
 Operational management
 Knowledge workers
 Data workers
 Production or service workers
• Each group has different needs for information.

Figure 2-3
Business organizations are
hierarchies consisting of
three principal levels:
senior management, middle
management, and operational
management. Information
systems serve each of these
levels. Scientists and
knowledge workers often
work with middle
management.
Levels in a Firm

• Global environment
factors
• Technology and
science
• Economy
• Politics
• International
change
• Immediate
environment factors
• Customers
• Suppliers
• Competitors
• Regulations
• Stockholders
The Business Environment

The Business Environment
To be successful, an
organization must constantly
monitor and respond to—or even
anticipate—developments in its
environment. A firm’s
environment includes specific
groups with which the business
must deal directly, such as
customers, suppliers, and
competitors as well as the
broader general environment,
including socioeconomic trends,
political conditions,
technological innovations, and
global events.
Figure 2-4

The Role of Information Systems in a Business
• Firms invest in information systems in order to:
• Achieve operational excellence
• Develop new products and services
• Attain customer intimacy and service
• Improve decision making
• Promote competitive advantage
• Ensure survival

Types of Business Information Systems
Systems for Management Decision Making and
Business Intelligence
• Transaction processing systems (TPS)
• Keep track of basic activities and transactions of organization
• Systems for business intelligence
• Address decision-making needs of all levels of management
• Management information systems (MIS)
• Decision support systems (DSS)
• Executive support systems (ESS)

• Transaction processing systems:
• Serve operational managers
• Principal purpose is to answer routine questions and
to track the flow of transactions through the
organization
• E.g., inventory questions, granting credit to customer
• Monitor status of internal operations and firm’s
relationship with external environment
• Major producers of information for other systems
• Highly central to business operations and
functioning

Figure 2-5
ATPS for payroll
processing captures
employee payment
transaction data (such
as a timecard). System
outputs include online
and hard copy reports
for management and
employee paychecks.
A Payroll TPS

• Management information systems:
• Provide middle managers with reports on firm’s
performance
• To monitor firm and help predict future
performance
• Summarize and report on basic operations using
data from TPS
• Provide weekly, monthly, annual results, but may
enable drilling down into daily or hourly data
• Typically not very flexible systems with little analytic
capability

Figure 2-6
How MIS Obtain Their Data from TPS

Sample MIS Report
Figure 2-7
This report,
showing
summarized
annual sales
data, was
produced by
the MIS in
Figure 2-6.

Can Airlines Solve Their Baggage Handling?
• What types of transactions do baggage handling systems handle?
• What are the people, organization, and technology components of
baggage handling systems?
• What is the problem these baggage handling systems are trying to
solve? What is the business impact of this problem? Are today’s
handling systems a solution?
• What kinds of management reports are generated from these
systems?

• Decision support systems (DSS):
• Serve middle managers
• Support nonroutine decision making
• E.g., What is impact on production schedule if
December sales doubled?
• Often use external information as well from
TPS and MIS
• Model driven DSS
• Voyage-estimating systems
• Data driven DSS
• Intrawest’s marketing analysis systems

Voyage-Estimating Decision Support System
Figure 2-8
This DSS operates on
a powerful PC. It is
used daily by
managers who must
develop bids on
shipping contracts.

• Executive support systems (ESS):
• Serve senior managers
• Address strategic issues and long-term trends
• E.g., What products should we make in five years?
• Address nonroutine decision making
• Provide generalized computing capacity that can be
applied to changing array of problems
• Draw summarized information from MIS, DSS, and
data from external events
• Typically use portal with Web interface, or digital
dashboard, to present content

Digital Dashboard
A digital dashboard
delivers comprehensive
and accurate
information
for decision making
often using a single
screen. The graphical
overview of key
performance
indicators helps
managers quickly
spot areas that need
attention.

Interactive Session: Organizations
Piloting Valero with Real-Time Management
• What people, organization, and technology issues had to be
addressed when developing Valero’s dashboard?
• What measurements of performance do dashboards display? What
management decisions would benefit from Valero’s dashboard?
• What kinds of information systems are required for Valero to operate
its refining dashboard?
• How effective are Valero’s dashboards in helping management?
• Should Valero develop a dashboard to measure the factors in its
environment which it doesn’t control?

Systems for Linking the Enterprise
• Enterprise applications
• Systems that span functional areas, focus on
executing business processes across the firm,
and include all levels of management
• Four major types
1. Enterprise systems
2. Supply chain management systems
3. Customer relationship management systems
4. Knowledge management systems

Enterprise Application Architecture
Figure 2-9
Enterprise applications
automate processes that
span multiple business
functions and
organizational levels
and may extend outside
the organization.

Enterprise Systems
• Also called enterprise resource planning (ERP)
systems
• Integrate data from key business processes into
single system
• Speed communication of information throughout
firm
• Enable greater flexibility in responding to customer
requests, greater accuracy in order fulfillment
• Enable managers to assemble overall view of
operations

Supply Chain Management Systems
• Manage relationships with suppliers, purchasing
firms, distributors, and logistics companies
• Manage shared information about orders,
production, inventory levels, and so on
• Goal is to move correct amount of product from source to
point of consumption as quickly as possible and at
lowest cost
• Type of interorganizational system:
• Automating flow of information across organizational
boundaries

Customer Relationship Management Systems
• Help manage relationship with customers
• Coordinate business processes that deal with
customers in sales, marketing, and customer
service
• Goals:
• Optimize revenue
• Improve customer satisfaction
• Increase customer retention
• Identify and retain most profitable customers

Knowledge Management Systems
• Manage processes for capturing and
applying knowledge and expertise
• Collect relevant knowledge and make it
available wherever needed in the enterprise
to improve business processes and
management decisions
• Link firm to external sources of knowledge

Intranets and Extranets
• Technology platforms that increase integration
and expedite the flow of information
• Intranets:
• Internal networks based on Internet standards
• Often are private access area in company’s Web
site
• Extranets:
• Company Web sites accessible only to authorized
vendors and suppliers
• Facilitate collaboration

E-Business, E-Commerce, and E-Government
• E-business:
• Use of digital technology and Internet to drive major
business processes
• E-commerce:
• Subset of e-business
• Buying and selling goods and services through Internet
• E-government:
• Using Internet technology to deliver information and
services to citizens, employees, and businesses

Systems for Collaboration and Teamwork
What Is Collaboration?
• Growing Importance of collaboration:
• Changing nature of work
• Growth of professional work
• Changing organization of the firm
• Changing scope of the firm
• Emphasis on innovation
• Changing culture of work and business

Business Benefits of Collaboration and Teamwork
• Recent surveys find that investment in
collaboration technology can return large
rewards, especially in:
• Sales and marketing
• Research and development
• Older, “command and control,” hierarchical
management allowed little horizontal
communication
• Today, businesses rely more on teams at all
levels

Figure 2-10
Requirements for Collaboration
Successful collaboration
requires an appropriate
organizational structure
and culture, along with
appropriate collaboration
technology.

Tools and Technologies for Collaboration and Teamwork
• E-mail and instant messaging (IM)
• Social networking
• Wikis
• Virtual worlds
• Internet-based collaboration environments
• Virtual meeting systems (telepresence)
• Google Apps/Google Sites
• Microsoft SharePoint
• Lotus Notes

The Information Systems Function in Business
Socialtext's enterprise
social networking
products including
microblogging, blogs,
wikis, profiles, and
social spreadsheets
enable employees to
share vital information
and work together in
real time. Built on a
flexible Web-oriented
architecture, Socialtext
integrates with virtually
any traditional system of
record, such as CRM and
ERP, enabling companies
to discuss, collaborate,
and take action on key
business processes.

The Time/Space
Collaboration Tool
Matrix
Collaboration technologies
can be classified in
terms of whether they
support interactions at
the same or different
time or place, and
whether these interactions
are remote or co-located.
Figure 2-11

Evaluating and Selecting Collaboration Software Tools
1. What are your firm’s collaboration challenges?
2. What kinds of solutions are available?
3. Analyze available products’cost and benefits.
4. Evaluate security risks.
5. Consult users for implementation and training issues.
6. Select candidate tools and evaluate vendors.

The Information Systems Department
• Programmers
• Systems analysts
• Principle liaisons to rest of firm
• Information systems managers
• Leaders of teams of programmers and analysts, project
managers, physical facility managers,
telecommunications managers, database specialists,
managers of computer operations, and data entry staff
• Senior managers: CIO, CPO, CSO, CKO
• End users

Information Systems Services
• Computing services
• Telecommunications services
• Data management services
• Application software services
• Physical facilities management services
• IT management services
• IT standards services
• IT educational services
• IT research and development services

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