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Chapter 2



Information Technologies:
Concepts and Management




                            1
Information System : Concepts and
                   Definitions

An information system (IS) collects, processes, stores,
analyzes, and disseminates information for a specific
purpose “Application”.

  •   Hardware
  •   Software
  •   Data
  •   Network
  •   Procedures
  •   People


                                                          2
Information System – Primary Purpose
      Collects data, processes it into information then converts
      information into knowledge for a specific purpose.
• Data
   – Elementary description of things, events, activities, and transactions that are
     recorded, classified, and stored, but not organized to convey any specific
     meaning
• Information
   – Data that has been organized so that they have meaning and value to the
     recipient
• Knowledge
   – Information that has been organized and processed to convey understanding,
     experience, and expertise as they apply to a current problem or activity


                                                                                3
Business Value Chain




                       4
Information System – Classification By
            Organizational Structure




An information system (IS) can span
departments, business units and corporations.




                                                5
Information System – Classification By
Organizational Structure – The FedEx Example




                                               6
Information System - Classification By Support
                   Function




                                                 7
Information System - Classification By Function
                            (Department)

       An information system (IS) support each department in
       a corporation.
                       Accounting IS

                                             HR
     Finance IS                                         Corporate
                                                           B
                                                         System
                      Corporate
                         A
Marketing IS           System
                                             E-Market

                                                        Corporate
                                                            C
    Production IS           Administrative
                                                         Systeem

                                                                8
Personal Information Management
• Small systems built to support individuals in the
  organization.
• Intends to support the activities of the individual to
  perform them easefully.
• Assists acquisition, organization, maintenance, retrieval
  and sharing of information.
   – Eg: PDA, Excel




                                            9
Transaction Processing System (TPS)

• Transactions…
   – Basic business operations such as customer orders,
      purchase orders, receipts, time cards, invoices, and payroll
      checks in an organization
• Transaction processing systems (TPS)
   – TPS supports monitoring, collection, storage, processing
      and dissemination of the organization’s basic business
      transactions.
• Critical to the success of an organization.
• Collects data continuously, frequently on a daily basis, or even
  in real time.
                                                                10
A Symbolic Representation of Payroll
TPS




                                       11
Transaction Processing System (TPS)

• TPS automates routine and repetitive tasks that are critical to
  the operation of the organization.
   – Preparing a payroll, billing customers, Point-of-Sale, and Warehouse
     operations
• Data collected from this operation supports the MIS and DSS
  systems employed by Middle Management
• Computerizes the primary and most of the secondary activities
  on the Value Chain
• Primary purpose to perform transactions and collect data



                                                                       12
Batch Schematic



   Data entry
                     Input
of accumulated                     Output
                   (batched)
  transactions
On-line Schematic


                      Terminal
           Terminal                       Terminal


                                                     Output
                                 Immediate
Terminal                         processing
                                 of each
                                 transaction


       Terminal
                      Terminal
Batch vs. On-Line Transaction
    Processing
•    Two types of TPS:
     – Batch processing
       •   A system whereby business transactions are
           accumulated over a period of time and prepared for
           processing as a single unit or batch
     – On-line transaction processing (OLTP)
       •   A system whereby each transaction is processed
           immediately, without the delay of accumulating
           transactions into a batch
2 it supp_sys
Management Information Systems
                  (MIS)
• MIS access, organize, summarize, and display information for
  supporting routine decision making in the functional areas.
   – Geared toward middle managers,
   – Characterized mainly by their ability to produce periodic reports such as
     a daily list of employees and the hours they work, or a monthly report of
     expenses as compared to a budget
• Eg: Replenishment, Pricing Analysis (Markdowns) and Sales
  Management
• Decisions supported are more structured
• Primary purpose to process data into information


                                                                           17
Management Information Systems




                                 18
Decision Support Systems (DSS)
• These systems support complex non-routine decisions
• Primary purpose to process data into information
• DSS systems are typically employed by tactical level
  management whose decisions and what-if analyses are less
  structured
• This information system not only presents the results but also
  expands the information with alternatives
• Some DSS methodologies
   –   Mathematical Modeling
   –   Simulation
   –   Queries
   –   What-If (OLAP-Cubes)
   –   Data mining

                                                              19
Voyage Estimating DSS




                        20
Intelligent Support Systems (ISS)
• Essentially, artificial intelligence (AI) these systems perform intelligent
  problem solving.
• One application of AI is expert systems.
• Expert systems (ESs) provide the stored knowledge of experts to non-
  experts, so the latter can solve difficult or time-consuming problems.
    • These advisory systems differ from TPS, which centers on data, and from MIS
      and DSS, which concentrates on processing information.
    • With DSS, users make their decisions according to the information generated
      from the systems.
    • With ES, the system makes recommended decisions for the users based on the
      built-in expertise and knowledge.



                                                                             21
Executive Support Systems (ESS)
• ESS systems or Enterprise Information Systems (EIS) were
  originally implemented to support senior management. These
  systems have been expanded to support other managers within
  the enterprise
• At the senior management level they support Strategic
  Activities which deals with situations that may significantly
  change the manner in which business is done




                     Chapter 2                                22
Office Automation Systems (OAS)
• Electronic communication is only one aspect of what is now
  known as an office automation system (OAS). Other aspects
  include word processing systems, document management
  systems, and desktop publishing systems

• OAS systems are predominantly used by clerical workers who
  support managers at all levels. Among clerical workers, those
  who use, manipulate, or disseminate information are referred to
  as data workers




                                                               23
Knowledge Management Systems
                (KMS)
• An additional level of staff support exists between top and
  middle management.
   • These are professional people, such as financial and marketing analysts
     that act as advisors and assistants to both top and middle management.
   • They are responsible for finding or developing new knowledge
     (External Content) for the organization and integrating it with existing
     knowledge (Internal Content)
• KMS that support these knowledge workers range from
  Internet search engines and expert systems, to Web-based
  computer-aided design and sophisticated data management
  systems


                                                                           24
Expand our Scope to Include External
              Environments
The flow of materials, information, money, and services from raw
 material suppliers through factories and warehouses to the end
                   customers is a supply chain.
                                     – Upstream supply chain
    Components of the Supply Chain




                                        • includes the organizations first-tier suppliers and their
                                          suppliers
                                     – Internal supply chain
                                        • includes all the processes used by an organization in
                                          transforming the inputs of the suppliers to outputs
                                     – Downstream supply chain
                                        • includes all the processes involved in delivering the
                                          products to final customers

                                                                                               25
People in Organizations




                          26
Inter-Organizational Systems (IOS)
• IOS are systems that connect two or more organizations.
  These systems are common among business partners and
  play a major role in e-commerce as well as in supply chain
  management support
• The first type of IT system that was developed in the 1980s
  to improve communications with business partners was
  electronic data interchange (EDI), which involved
  computer-to-computer direct communication of standard
  business documents (such as purchase orders and order
  confirmations) between business partners. These systems
  became the basis for electronic markets, which later
  developed into electronic commerce.


                                                                27
Inter-Organizational Systems (IOS)
• Web-based systems (many using XML) deliver
  business applications via the Internet. Using browsers
  and the Internet, people in different organizations
  communicate, collaborate, access vast amounts of
  information, and run most of the organization’s tasks
  and processes.




                                                      28
Information Systems Infrastructure
• Meaning:
  – Information infrastructure consists of the physical
    facilities, services, and management that support all
    shared computing resources in an organization.
• Components:
  – Hardware,
  – Software,
  – Networks & communications,
  – Databases & data workers,
  – Information Management Personnel                   29
Information Technology
            Architecture
• Meaning:
  – It is a high-level map or plan of the information
    assets in an organization including the physical
    design of the building that holds the hardware.




                                                   30
Information Architecture Classified by
             Hardware
  A common way to classify information
  architecture is by computing paradigms, which
  are the core of the architecture.
   • Mainframe Environment
   • PC Environment
   • PC-LAN Environment
   • Distributed Computing Environment
   • Client/Server Environment
   • Enterprise-wide Computing Environment
   • Legacy systems

                                              31
The Web Based IT Architectures
    Web-based systems refer to applications or services
    that are resident on a server that is accessible using a Web
    browser. The only client-side software needed to access
    and execute these applications is a Web browser
    environment.

•   The Internet                       Electronic Storefronts
•   Intranets                          Electronic Markets
•   Extranets                          Electronic Exchanges
•   Corporate Portals                  M-Commerce
•   E-commerce Systems
                                       Enterprise Web
                                                                   32
Extranets
• Connect several intranets via the Internet, by adding a security
  mechanism and some additional functionalities

• Form a larger virtual network that allows remote users (such as
  business partners or mobile employees) to securely connect
  over the Internet to the enterprise’s main intranet

• Extranets are also employed by two or more enterprises
  (suppliers & buyers) to share information in a controlled
  fashion, and therefore they play a major role in the
  development of business-to-business electronic commerce and
  Supply Chain systems

                                                 33
Managing Information Systems
• Information Systems (IS) have enormous strategic value. When they
  are not working (even for a short time), an organization cannot
  function. Furthermore, the Life Cycle Costs (acquisition, operation,
  security, and maintenance) of these systems are considerable.
  Therefore, it is essential to manage them properly. The planning,
  organizing, implementing, operating, and controlling of the
  infrastructures and the organization’s portfolio of applications must be
  done with great skill
• The responsibility for the management of information resources is
  divided between two organizational entities:
    – The information systems department (ISD), which is a corporate entity
    – the end users, who are scattered throughout the organization.


                                                                              34
Managerial Issues
   The transition to e-business.
     Converting an organization to a networked computing-based
      e-business may be a complicated process.
     The e-business requires a client/server architecture, an
      intranet, an Internet connection, and e-commerce policy
      and strategy; all in the face of many unknowns and risks.
     However, in many organizations this potentially painful
      conversion may be the only way to succeed or even to
      survive.
     When to do it, how to do it, what the role of the enabling
      information technologies will be, and what the impacts will
      be of such a conversion are major issues for organizations to
      consider.                                                  35
Managerial Issues (Continued)
• From legacy systems to client/server to
  intranets, corporate portals, and Web-based
  systems.
• A related major issue is whether, when, and how to
  move from the legacy systems to a Web-based
  client/server enterprise-wide architecture.
• While the general trend is toward Web-based
  client/server, there have been several unsuccessful
  transformations and many unresolved issues regarding
  the implementation of these systems.
• The introduction of intranets seems to be much easier
                                                      36
Managerial Issues (Continued)
• Yet, moving to any new architecture requires new
  infrastructure and a decision about what to do with the
  legacy systems, which may have a considerable impact
  on people, quality of work, and budget.
• A major aspect is the introduction of wireless
  infrastructure




                                                       37
Managerial Issues (Continued)
How to deal with the outsourcing and utility
computing trends.

As opportunities for outsourcing (e.g., ASPs) are
becoming cheaper, available, and viable, the concept
becomes more attractive. In the not-so-distant future,
we will see outsourcing in the form of utility
computing. How much to outsource is a major
managerial issue.


                                                     38
Managerial Issues (Continued)
• How much infrastructure? Justifying information
  system applications is not an easy job due to the
  intangible benefits and the rapid changes in
  technologies that often make systems obsolete.
  Justifying infrastructure is even more difficult since
  many users and applications share the infrastructure
  that will be used for several years in the future. This
  makes it almost impossible to quantify the benefits.
  Basic architecture is a necessity, but there are some
  options.

                                                       39
Managerial Issues (Continued)
The roles of the ISD and end users. The role of the ISD
   can be extremely important, yet top management frequently
   mistreats it. By constraining the ISD to technical duties, top
   management may jeopardize an organization’s entire future.
   However, it is not economically feasible for the ISD to
   develop and manage all IT applications in an organization.
   End users play an important role in IT development and
   management. The end users know best what their
   information needs are and to what degree they are fulfilled.
   Properly managed end-user computing is essential for the
   betterment of all organizations.


                                                                40
Managerial Issues (Continued)
• Ethical issues. Systems developed by the ISD and
  maintained by end users may introduce some ethical
  issues. The ISD’s major objective should be to build
  efficient and effective systems. But, such systems may
  invade the privacy of the users or create advantages for
  certain individuals at the expense of others.




                                                        41

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2 it supp_sys

  • 2. Information System : Concepts and Definitions An information system (IS) collects, processes, stores, analyzes, and disseminates information for a specific purpose “Application”. • Hardware • Software • Data • Network • Procedures • People 2
  • 3. Information System – Primary Purpose Collects data, processes it into information then converts information into knowledge for a specific purpose. • Data – Elementary description of things, events, activities, and transactions that are recorded, classified, and stored, but not organized to convey any specific meaning • Information – Data that has been organized so that they have meaning and value to the recipient • Knowledge – Information that has been organized and processed to convey understanding, experience, and expertise as they apply to a current problem or activity 3
  • 5. Information System – Classification By Organizational Structure An information system (IS) can span departments, business units and corporations. 5
  • 6. Information System – Classification By Organizational Structure – The FedEx Example 6
  • 7. Information System - Classification By Support Function 7
  • 8. Information System - Classification By Function (Department) An information system (IS) support each department in a corporation. Accounting IS HR Finance IS Corporate B System Corporate A Marketing IS System E-Market Corporate C Production IS Administrative Systeem 8
  • 9. Personal Information Management • Small systems built to support individuals in the organization. • Intends to support the activities of the individual to perform them easefully. • Assists acquisition, organization, maintenance, retrieval and sharing of information. – Eg: PDA, Excel 9
  • 10. Transaction Processing System (TPS) • Transactions… – Basic business operations such as customer orders, purchase orders, receipts, time cards, invoices, and payroll checks in an organization • Transaction processing systems (TPS) – TPS supports monitoring, collection, storage, processing and dissemination of the organization’s basic business transactions. • Critical to the success of an organization. • Collects data continuously, frequently on a daily basis, or even in real time. 10
  • 11. A Symbolic Representation of Payroll TPS 11
  • 12. Transaction Processing System (TPS) • TPS automates routine and repetitive tasks that are critical to the operation of the organization. – Preparing a payroll, billing customers, Point-of-Sale, and Warehouse operations • Data collected from this operation supports the MIS and DSS systems employed by Middle Management • Computerizes the primary and most of the secondary activities on the Value Chain • Primary purpose to perform transactions and collect data 12
  • 13. Batch Schematic Data entry Input of accumulated Output (batched) transactions
  • 14. On-line Schematic Terminal Terminal Terminal Output Immediate Terminal processing of each transaction Terminal Terminal
  • 15. Batch vs. On-Line Transaction Processing • Two types of TPS: – Batch processing • A system whereby business transactions are accumulated over a period of time and prepared for processing as a single unit or batch – On-line transaction processing (OLTP) • A system whereby each transaction is processed immediately, without the delay of accumulating transactions into a batch
  • 17. Management Information Systems (MIS) • MIS access, organize, summarize, and display information for supporting routine decision making in the functional areas. – Geared toward middle managers, – Characterized mainly by their ability to produce periodic reports such as a daily list of employees and the hours they work, or a monthly report of expenses as compared to a budget • Eg: Replenishment, Pricing Analysis (Markdowns) and Sales Management • Decisions supported are more structured • Primary purpose to process data into information 17
  • 19. Decision Support Systems (DSS) • These systems support complex non-routine decisions • Primary purpose to process data into information • DSS systems are typically employed by tactical level management whose decisions and what-if analyses are less structured • This information system not only presents the results but also expands the information with alternatives • Some DSS methodologies – Mathematical Modeling – Simulation – Queries – What-If (OLAP-Cubes) – Data mining 19
  • 21. Intelligent Support Systems (ISS) • Essentially, artificial intelligence (AI) these systems perform intelligent problem solving. • One application of AI is expert systems. • Expert systems (ESs) provide the stored knowledge of experts to non- experts, so the latter can solve difficult or time-consuming problems. • These advisory systems differ from TPS, which centers on data, and from MIS and DSS, which concentrates on processing information. • With DSS, users make their decisions according to the information generated from the systems. • With ES, the system makes recommended decisions for the users based on the built-in expertise and knowledge. 21
  • 22. Executive Support Systems (ESS) • ESS systems or Enterprise Information Systems (EIS) were originally implemented to support senior management. These systems have been expanded to support other managers within the enterprise • At the senior management level they support Strategic Activities which deals with situations that may significantly change the manner in which business is done Chapter 2 22
  • 23. Office Automation Systems (OAS) • Electronic communication is only one aspect of what is now known as an office automation system (OAS). Other aspects include word processing systems, document management systems, and desktop publishing systems • OAS systems are predominantly used by clerical workers who support managers at all levels. Among clerical workers, those who use, manipulate, or disseminate information are referred to as data workers 23
  • 24. Knowledge Management Systems (KMS) • An additional level of staff support exists between top and middle management. • These are professional people, such as financial and marketing analysts that act as advisors and assistants to both top and middle management. • They are responsible for finding or developing new knowledge (External Content) for the organization and integrating it with existing knowledge (Internal Content) • KMS that support these knowledge workers range from Internet search engines and expert systems, to Web-based computer-aided design and sophisticated data management systems 24
  • 25. Expand our Scope to Include External Environments The flow of materials, information, money, and services from raw material suppliers through factories and warehouses to the end customers is a supply chain. – Upstream supply chain Components of the Supply Chain • includes the organizations first-tier suppliers and their suppliers – Internal supply chain • includes all the processes used by an organization in transforming the inputs of the suppliers to outputs – Downstream supply chain • includes all the processes involved in delivering the products to final customers 25
  • 27. Inter-Organizational Systems (IOS) • IOS are systems that connect two or more organizations. These systems are common among business partners and play a major role in e-commerce as well as in supply chain management support • The first type of IT system that was developed in the 1980s to improve communications with business partners was electronic data interchange (EDI), which involved computer-to-computer direct communication of standard business documents (such as purchase orders and order confirmations) between business partners. These systems became the basis for electronic markets, which later developed into electronic commerce. 27
  • 28. Inter-Organizational Systems (IOS) • Web-based systems (many using XML) deliver business applications via the Internet. Using browsers and the Internet, people in different organizations communicate, collaborate, access vast amounts of information, and run most of the organization’s tasks and processes. 28
  • 29. Information Systems Infrastructure • Meaning: – Information infrastructure consists of the physical facilities, services, and management that support all shared computing resources in an organization. • Components: – Hardware, – Software, – Networks & communications, – Databases & data workers, – Information Management Personnel 29
  • 30. Information Technology Architecture • Meaning: – It is a high-level map or plan of the information assets in an organization including the physical design of the building that holds the hardware. 30
  • 31. Information Architecture Classified by Hardware A common way to classify information architecture is by computing paradigms, which are the core of the architecture. • Mainframe Environment • PC Environment • PC-LAN Environment • Distributed Computing Environment • Client/Server Environment • Enterprise-wide Computing Environment • Legacy systems 31
  • 32. The Web Based IT Architectures Web-based systems refer to applications or services that are resident on a server that is accessible using a Web browser. The only client-side software needed to access and execute these applications is a Web browser environment. • The Internet Electronic Storefronts • Intranets Electronic Markets • Extranets Electronic Exchanges • Corporate Portals M-Commerce • E-commerce Systems Enterprise Web 32
  • 33. Extranets • Connect several intranets via the Internet, by adding a security mechanism and some additional functionalities • Form a larger virtual network that allows remote users (such as business partners or mobile employees) to securely connect over the Internet to the enterprise’s main intranet • Extranets are also employed by two or more enterprises (suppliers & buyers) to share information in a controlled fashion, and therefore they play a major role in the development of business-to-business electronic commerce and Supply Chain systems 33
  • 34. Managing Information Systems • Information Systems (IS) have enormous strategic value. When they are not working (even for a short time), an organization cannot function. Furthermore, the Life Cycle Costs (acquisition, operation, security, and maintenance) of these systems are considerable. Therefore, it is essential to manage them properly. The planning, organizing, implementing, operating, and controlling of the infrastructures and the organization’s portfolio of applications must be done with great skill • The responsibility for the management of information resources is divided between two organizational entities: – The information systems department (ISD), which is a corporate entity – the end users, who are scattered throughout the organization. 34
  • 35. Managerial Issues  The transition to e-business.  Converting an organization to a networked computing-based e-business may be a complicated process.  The e-business requires a client/server architecture, an intranet, an Internet connection, and e-commerce policy and strategy; all in the face of many unknowns and risks.  However, in many organizations this potentially painful conversion may be the only way to succeed or even to survive.  When to do it, how to do it, what the role of the enabling information technologies will be, and what the impacts will be of such a conversion are major issues for organizations to consider. 35
  • 36. Managerial Issues (Continued) • From legacy systems to client/server to intranets, corporate portals, and Web-based systems. • A related major issue is whether, when, and how to move from the legacy systems to a Web-based client/server enterprise-wide architecture. • While the general trend is toward Web-based client/server, there have been several unsuccessful transformations and many unresolved issues regarding the implementation of these systems. • The introduction of intranets seems to be much easier 36
  • 37. Managerial Issues (Continued) • Yet, moving to any new architecture requires new infrastructure and a decision about what to do with the legacy systems, which may have a considerable impact on people, quality of work, and budget. • A major aspect is the introduction of wireless infrastructure 37
  • 38. Managerial Issues (Continued) How to deal with the outsourcing and utility computing trends. As opportunities for outsourcing (e.g., ASPs) are becoming cheaper, available, and viable, the concept becomes more attractive. In the not-so-distant future, we will see outsourcing in the form of utility computing. How much to outsource is a major managerial issue. 38
  • 39. Managerial Issues (Continued) • How much infrastructure? Justifying information system applications is not an easy job due to the intangible benefits and the rapid changes in technologies that often make systems obsolete. Justifying infrastructure is even more difficult since many users and applications share the infrastructure that will be used for several years in the future. This makes it almost impossible to quantify the benefits. Basic architecture is a necessity, but there are some options. 39
  • 40. Managerial Issues (Continued) The roles of the ISD and end users. The role of the ISD can be extremely important, yet top management frequently mistreats it. By constraining the ISD to technical duties, top management may jeopardize an organization’s entire future. However, it is not economically feasible for the ISD to develop and manage all IT applications in an organization. End users play an important role in IT development and management. The end users know best what their information needs are and to what degree they are fulfilled. Properly managed end-user computing is essential for the betterment of all organizations. 40
  • 41. Managerial Issues (Continued) • Ethical issues. Systems developed by the ISD and maintained by end users may introduce some ethical issues. The ISD’s major objective should be to build efficient and effective systems. But, such systems may invade the privacy of the users or create advantages for certain individuals at the expense of others. 41