2. 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 2
3. Objectives (continued)
• Describe careers in information technology
• Identify major ethical and societal concerns
created by widespread use of information
technology
Management Information Systems, Sixth Edition 3
4. Does Information Technology Matter?
• Hackett Group study: “Does IT Matter? Hackett
Concludes the Answer is Yes”
– World’s best performing companies spent 7%
more per employee on IT than typical companies
– They recouped the investment fivefold in lower
operational costs
• Today’s business professionals must know how
to develop and use IT
Management Information Systems, Sixth Edition 4
5. 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
Management Information Systems, Sixth Edition 5
6. 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
Management Information Systems, Sixth Edition 6
7. 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
Management Information Systems, Sixth Edition 7
8. 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
Management Information Systems, Sixth Edition 8
9. Data, Information,
and Information Systems
• “Data,” “information,” and “system” are
commonly used terms
• Important to understand their similarities and
differences
Management Information Systems, Sixth Edition 9
10. 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
Management Information Systems, Sixth Edition 10
11. 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
Management Information Systems, Sixth Edition 11
12. 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
Management Information Systems, Sixth Edition 12
14. 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
Management Information Systems, Sixth Edition 14
16. What Is a System?
• System: array of components that work together
to achieve goal or goals
• System
– Accepts input
– Processes input
– Produces output
Management Information Systems, Sixth Edition 16
17. 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
Management Information Systems, Sixth Edition 17
18. What is a System? (continued)
Management Information Systems, Sixth Edition 18
19. 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
– Subsystems by definition are always open
• Information system (IS): components that work
together to process data and produce
information
Management Information Systems, Sixth Edition 19
20. 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
Management Information Systems, Sixth Edition 20
21. 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
Management Information Systems, Sixth Edition 21
22. 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
Management Information Systems, Sixth Edition 22
24. 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
Management Information Systems, Sixth Edition 24
25. Information Systems in Organizations
(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
Management Information Systems, Sixth Edition 25
26. Information Systems in Organizations
(continued)
Management Information Systems, Sixth Edition 26
27. 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
Management Information Systems, Sixth Edition 27
28. 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
Management Information Systems, Sixth Edition 28
29. 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
Management Information Systems, Sixth Edition 29
30. Computer Equipment
for Information Systems (continued)
Management Information Systems, Sixth Edition 30
31. 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
Management Information Systems, Sixth Edition 31
32. 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
Management Information Systems, Sixth Edition 32
33. 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
Management Information Systems, Sixth Edition 33
34. 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
Management Information Systems, Sixth Edition 34
35. 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
Management Information Systems, Sixth Edition 35
36. 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
Management Information Systems, Sixth Edition 36
37. 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 knowledge-
intensive decision making
– Uses artificial intelligence techniques
– Can preserve the knowledge of retiring experts
Management Information Systems, Sixth Edition 37
38. 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
Management Information Systems, Sixth Edition 38
40. 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
Management Information Systems, Sixth Edition 40
41. 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
Management Information Systems, Sixth Edition 41
42. Finance
• Finance systems:
– Facilitate financial planning and business
transactions
• Tasks include organizing budgets, managing
cash flow, analyzing investments, and making
decisions
Management Information Systems, Sixth Edition 42
43. Marketing
• Marketing’s 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
Management Information Systems, Sixth Edition 43
44. 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
Management Information Systems, Sixth Edition 44
45. 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
Management Information Systems, Sixth Edition 45
46. 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
Management Information Systems, Sixth Edition 46
47. 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
user’s PC
– May need to have knowledge of a wide variety of
PC applications
Management Information Systems, Sixth Edition 47
48. 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
Management Information Systems, Sixth Edition 48
49. 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
Management Information Systems, Sixth Edition 49
51. System Administrator
• System administrator: manages an
organization’s 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
Management Information Systems, Sixth Edition 51
52. 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
Management Information Systems, Sixth Edition 52
53. 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)
Management Information Systems, Sixth Edition 53
54. 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
Management Information Systems, Sixth Edition 54
55. Chief Information Officer and
Chief Technology Officer (continued)
Management Information Systems, Sixth Edition 55
56. 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
Management Information Systems, Sixth Edition 56
57. 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
Management Information Systems, Sixth Edition 57
58. Summary (continued)
• The job prospects for IT professionals are bright
• IT has created societal concerns regarding
privacy, identity theft, spam, and Web
annoyances
Management Information Systems, Sixth Edition 58