Welcome to the Information Age
The Evolution of the Information Age
Senn, Information Technology, 3rd
Edition
MANAGEMENT INFORMATION
SYSTEMS
What is a SYSTEM?
A system is a group of interrelated components working
together toward a common goal by accepting inputs and
producing outputs in an organized transformation
process.
Systems structure
Components and their attribution
Systems structure: relationship between components
Subsystems
Environment and Boundary
Input and Output
Subsystems
S1
S2
Systems Boundary
Systems Input
S4
S3
Output
Environment
Abstract Concept of a Systems
INPUT
PROCESS
FEEDBACK
OUTPUT
What is an Information Systems?
An information system can be any
organized combination of people,
hardware, software, communications
network, and data resources that collects,
transforms, and disseminates information
in an organization
Functions of an Information System
Computer-based Information System
An Information System is an organized combination of people,
hardware, software, communication networks and the data resources that
collects, transforms and disseminates information in a organization.
Computer-Based Information
Systems
CBIS components
Hardware: computer equipment used to perform input,
processing, and output activities
Software: computer programs that govern the operation
of the computer
Database: organized collection of facts and information
Telecommunications: electronic transmission of signals
for communications
Networks: connect computers and equipment in a
building, around the country, and around the world
Senn, Information Technology, 3rd
Edition
IS Vs IT
Payroll
System
INFORMATION
TECHNOLOGY
Inventory
System
Hardware
Software
Databases
Networks
Other related
components
are used to build
INFORMATION
SYSTEMS
Marketing
System
Customer
Service
System
What is an Information System
Organized combination of
1. Hardware
2. Software
3. Communications Networks
4. Data
5. People
Computer Hardware Technologies
Examples
Dell PowerEdge 2600 File Server
Apple iMac
Sony LCD Flat Panel Monitor
iPod
IDAutomation USB Barcode Scanner
RFID Chip
Computer Software Technology
Examples
Windows XP
Graphics Card Driver Software
PowerPoint
mySAP Customer Relationship Management
Peachtree Accounting
iTunes Software
Data Resource Management
Technologies
Examples
IBM DB2 8.2
Microsoft SQL Server 2000
Oracle Database 10g
MySQL
Data Mining Software
Telecommunications Network
Technologies
Examples
Ethernet
Netgear Wireless Router
Cable Modem
Cell Phone
WiFi, WiMax card
Bluetooth device
People Technology
People are the 5th component of an
Information System
Everyone forgets the importance of people
in an information system.
Example: End User, Data Entry Person,
Manager, Programmer, DB Administrator,
Cashier, Secretary, Professor.
Data
Data are raw facts and
figures that on their
own have no meaning
These can be any
alphanumeric
characters i.e. text,
numbers, symbols
Data Examples
Yes, Yes, No, Yes, No, Yes, No, Yes
42, 63, 96, 74, 56, 86
111192, 111234
None of the above data sets have any
meaning until they are given a CONTEXT
and PROCESSED into a useable form
Data Into Information
To achieve its aims the organisation will
need to process data into information.
Data needs to be turned into meaningful
information and presented in its most
useful format
Data must be processed in a context in
order to give it meaning
Data vs. Information
Data: 51007
Information:
5/10/07 The date of your final exam.
$51,007 The average starting salary of an
accounting major.
51007 Zip code of Bronson Iowa.
Figure 1.1 Transforming data into information using a data process
Data vs. Information
Data
raw facts
no context
just numbers and text
Information
data with context
processed data
value-added to data
summarized
organized
analyzed
Data vs. information:
What is the difference?
What is data?
Data can be defined in
many ways. Information
science defines data as
unprocessed information.
What is information?
Information is data that
have been organized and
communicated in a coherent
and meaningful manner.
Data is converted into
information, and information
is converted into
knowledge.
Knowledge; information
evaluated and organized so
that it can be used
purposefully.
Data vs. Information
6.34
6.45
6.39
6.62
6.57
6.64
6.71
6.82
7.12
7.06
Information
SIRIUS SATELLITE RADIO INC.
$7.20
$7.00
$6.80
Stock Price
Data
$6.60
$6.40
$6.20
$6.00
$5.80
1
Last 10 Days
10
Data and Information
Example 1
Raw Data
Yes, Yes, No, Yes, No, Yes,
No, Yes, No, Yes, Yes
Context
Responses to the market
research question Would you
buy brand x at price y?
Processing
Information
???
Example 2
Raw Data
42, 63, 96, 74, 56, 86
Context
Jaynes scores in the six AS/A2
ICT modules
Processing
Information
???
Knowledge
Knowledge is the understanding of rules
needed to interpret information
the capability of understanding the
relationship
between
pieces
of
information and what to actually do
with the information
Knowledge Examples
Using the 2 previous examples:
A Marketing Manager could use this information to decide
whether or not to raise or lower price y
Jaynes teacher could analyse the results to determine
whether it would be worth her re-sitting a module
The Characteristics of Valuable
Information
30
The Characteristics of Valuable
Information (continued)
Types of information processing
Classification: This involves placing data into categories,
for example, categorising an expense as either a fixed or
a variable cost.
Rearranging/sorting: This involves organising data so
that items are grouped together or placed into a particular
order. Employee data, for example, might be sorted
according to last name or payroll number.
Aggregating: This involves summarising data, for
example, by calculating averages, totals or subtotals.
Performing calculations: An example might be
calculating an employees gross pay by multiplying the
number of hours worked by the hourly rate of pay.
Selection: This involves choosing or discarding items of
data on the basis of a set of selection criteria. A sales
organisation, for example, might create a list of potential
customers by selecting those with incomes above a
certain level.
Why do we need a database?
Keep records of our:
Clients
Staff
Volunteers
To keep a record of activities
and interventions;
Keep sales records;
Develop reports;
Perform research
What is the ultimate purpose of
a database management
Is
to
transform
system?
Data
Information
Knowledge
Action
Hierarchy of data
Example
Personel file
Database
Database
Department file
(Project database)
Payroll file
Files
Files
005-10-6321 Johns Francine 10-7-65
549-77-1001 Buckley Bill 2-17-79
098-40-1370 Fiske Steven 1-5-85
Records
Records
098-40-1370 Fiske Steven 1-5-85 598
Fields
Fields
Fiske
Characters
Characters
(bytes)
(bytes)
1000100
(Last name field)
(Letter F in ASCII)
(Personnel file)
(Record containing
SSN, last name,
first name, date of
hire)
Terminology
Database
File
A collection of related fields
Field
A collection of related records
Record
A collection of integrated and related files
A group of characters
Character
Basic building block of information, represented by a byte
Expansion of Yahoo
Yet Another Hierarchical Officious Oracle
Evolution of MIS:
Five phases in the development of
computing technology:
1) Mainframe and minicomputer computing,
2) Personal computers,
3) Client/server networks,
4) Enterprise computing, and
5) Cloud computing.
Management Information Systems
IT Infrastructure
Evolution of IT infrastructure
General-purpose mainframe & minicomputer
era: 1959 to present
Personal computer era: 1981 to present
1981 Introduction of IBM PC
Proliferation in 80s, 90s resulted in growth of personal
software
Client/server era: 1983 to present
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1958 IBM first mainframes introduced
1965 Less expensive DEC minicomputers introduced
Desktop clients networked to servers, with processing
work split between clients and servers
Network may be two-tiered or multitiered (N-tiered)
Various types of servers (network, application, Web)
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Management Information Systems
IT Infrastructure
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Management Information Systems
IT Infrastructure
Evolution of IT infrastructure (cont.)
Enterprise computing era: 1992 to
present
Move toward integrating disparate networks,
applications using Internet standards and
enterprise applications
Cloud Computing: 2000 to present
Refers to a model of computing where firms
and individuals obtain computing power and
software applications over the Internet or other
network
Fastest growing form of computing
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Management Information Systems
IT Infrastructure
Management Information Systems
IT Infrastructure
A MULTITIERED CLIENT/SERVER NETWORK (N-TIER)
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Google CEO
Eric Schmidt
Management Information Systems
IT Infrastructure
Technology drivers of infrastructure
evolution
Moores law and microprocessing power
Processing speed, memory capacity, sensors ,
size
Computing power doubles every 18 months
Nanotechnology:
Shrinks
size of transistors to size comparable to size of a
virus
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Law of Mass Digital Storage
The amount of data being stored each year doubles
PC hard drives have storage densities approaching
1 giga-byte per square inch and total capacities of
over 500 gigabytes.
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Management Information Systems
IT Infrastructure
Technology drivers of
infrastructure evolution (cont.)
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Declining communication costs and
the Internet
An estimated 1.5 billion people
worldwide have Internet access
As communication costs fall toward a
very small number and approach 0,
utilization of communication and
computing facilities explodes
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Management Information Systems
IT Infrastructure
Technology drivers of
infrastructure evolution (cont.)
48
Standards and network effects
Technology standards:
Technology standards are specifications
that establish the compatibility of
products and the ability to communicate
in a network
Unleash powerful economies of scale
and result in price declines as
manufacturers focus on the products
built to a single standard
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Management Information Systems
Infrastructure Components
IT Infrastructure has 7 main
components
1.
2.
3.
4.
5.
6.
7.
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Computer hardware platforms
Operating system platforms
Enterprise software applications
Data management and storage
Networking/telecommunications
platforms
Internet platforms
Consulting system integration services
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Management Information Systems
IT Infrastructure components
Management Information Systems
Infrastructure Components
Computer hardware platforms
Client machines
Desktop PCs, mobile devices PDAs, laptops
Servers
Blade servers: ultrathin computers stored in racks
web servers , Proxy servers ,on-line game servers
Mainframes:
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IBM mainframe equivalent to thousands of blade
servers
Top chip producers: AMD, Intel, IBM
Top firms: IBM, HP, Dell, Sun Microsystems
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Management Information Systems
Infrastructure Components
Operating system platforms
Operating systems
Server level: 75% run Windows; 25% run Unix or
Linux
Client level:
Enterprise software applications
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90% run Microsoft Windows (XP, 2000, CE,7 etc.)
Handheld device OSs (Android, iPhone OS)
Cloud computing OSs (Googles Chrome OS)
Enterprise application providers: SAP and
Oracle
Middleware providers: BEA
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Management Information Systems
Infrastructure Components
Data management and storage
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Database software:
IBM (DB2), Oracle, Microsoft (SQL Server),
Sybase (Adaptive Server Enterprise), MySQL
Physical data storage:
EMC Corp (large-scale systems), Seagate,
Maxtor, Western Digital
Storage area networks (SANs):
Connect multiple storage devices on
dedicated network
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Management Information Systems
Infrastructure Components
Networking/telecommunications
platforms
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Telecommunication services
Telecommunications, cable, telephone
company charges for voice lines and Internet
access
AT&T, Verizon
Network operating systems:
Windows Server, Novell, Linux, Unix
Network hardware providers:
Cisco, Alcatel-Lucent, Nortel, Juniper Networks
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Management Information Systems
Infrastructure Components
Internet platforms
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Hardware, software, management
services to support company Web sites,
intranets, extranets
Internet hardware server market: Dell,
HP/Compaq, IBM
Web development tools/suites:
Microsoft (FrontPage, .NET) IBM
(WebSphere) Sun (Java), independent
software developers: Adobe, RealMedia
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WHY INFORMATION SYSTEMS?
Why Information Systems Matter
There are four reasons why IT makes a difference to the
success of a business:
Capital management
Foundation of doing business
Productivity
Strategic opportunity and advantage
WHY INFORMATION SYSTEMS?
Capital Management:
IT is the largest single component of capital investment in the
United States.
About $1.8 trillion is spent each year by American businesses.
Managers and business students need to know how to invest
this capital wisely.
The success of your business in the future may well depend on
how you make IT investment decisions.
WHY INFORMATION SYSTEMS?
Foundation of doing business:
Most businesses today could not operate without extensive use of
information systems and technologies.
IT can increase market share.
IT can help a business become a high-quality,
low-cost producer.
IT is vital to the development of new products.
WHY INFORMATION SYSTEMS?
The Interdependence between Organizations and
Information Systems
WHY INFORMATION SYSTEMS?
Productivity:
IT is one of the most important tools managers have to
increase productivity and efficiency of businesses.
According to the Federal Reserve Bank, IT has reduced
the rate of inflation by 0.5 to 1% in the last decade.
For firms this means IT is a major factor in reducing
costs.
It is estimated that IT has increased productivity in the
economy by about 1% in the last decade. For firms this
means IT is a major source of labor and capital
efficiency.
WHY INFORMATION SYSTEMS?
Strategic Opportunity and Advantage:
Create competitive advantage: IT makes it possible to
develop competitive advantages.
New Business Models: Dell Computer has built its
competitive advantage on an IT enabled build-to-order
business model that other firms have not been able to
imitate.
WHY INFORMATION SYSTEMS?
Strategic Opportunity and Advantage:
Create new services: eBay has developed the largest
auction trading platform for millions of individuals and
businesses. Competitors have not been able to imitate
its success.
Differentiate yourself from your competitors: Amazon
has become the largest book retailer in the United
States on the strength of its huge online inventory and
recommender system. It has no rivals in size and scope.
WHY INFORMATION SYSTEMS?
Transformation of the Business Enterprise:
Flattening
Decentralization
Flexibility
WHY INFORMATION SYSTEMS?
Transformation of the Business Enterprise (Continued):
Location independence
Low transaction and coordination costs
Empowerment
Collaborative work and teamwork
WHY INFORMATION SYSTEMS?
The Emerging Digital Firm
Management Information Systems
Business Processes and Information Systems
Information technology enhances
business processes in two main ways:
1.
2.
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Increasing efficiency of existing
processes
Automating steps that were manual
Enabling entirely new processes that are
capable of transforming the businesses
Change flow of information
Replace sequential steps with parallel steps
Eliminate delays in decision making
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Managers and Information
The management pyramid
The Traditional
Organizational Pyramid
Many organizations follow pyramid model
CEO at top
Small group of senior managers, one level down
Larger number of middle managers, reporting to senior
managers
Many more lower-level managers who report to middle
managers
Clerical and Shop Floor Workers
Bottom of organizational pyramid
Operational Management
In charge of small groups of front-line workers
The Traditional
Organizational Pyramid
Tactical Management
Also called middle managers
Make decisions for subordinates, affecting the
near and somewhat more distant future
Strategic Management
Decisions affect entire or large parts of the
organization; what to do decisions
Business Processes and Information Systems
Business processes:
Manner in which work is organized, coordinated,
and focused to produce a valuable product or service
Concrete work flows of material, information, and
knowledgesets of activities
Unique ways to coordinate work, information, and
knowledge
Ways in which management chooses to coordinate
work
Examples of Business Processes
Manufacturing and production:
Assembling product, checking quality, producing bills
of materials
Sales and marketing:
Identifying customers, creating customer awareness,
selling
Finance & accounting:
Paying creditors, creating financial statements,
managing cash accounts
Human resources:
Hiring employees, evaluating performance, enrolling
employees in benefits plans
Types of information system
1.Types based on functional perspective
2.Types based on constituency perspective
Human resource Information
System
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Human Resource Systems :An Employee Recordkeeping System
Finance and Accounting
Information system
Manufacturing Information
System
SYSTEMS FROM A FUNCTIONAL PERSPECTIVE
Overview of an Inventory System
Sales and Marketing Information
System
Types of Information Systems
Managers and Their Information
Systems
Types of information systems typically used at different levels of an organizations
hierarchy
Managers and Their Information
Systems
Transaction-Processing Systems (TPS)
Capture and process raw materials for
information
Interfaced with applications to provide up-todate information
Clerical workers use TPS for routine
responsibilities
Operation managers also use TPS
Managers and Their Information
Systems
Decision Support Systems (DSS) and
Expert Systems (ES)
DSS and ES support more complex and
nonroutine decision-making and problemsolving activities
Used by middle managers as well as senior
managers
Managers and Their Information
Systems
Executive Information Systems (EIS)
Provide timely, concise information about
organization to top managers
Used by Strategic management
Provide internal as well as external information
Economic indices
Stock and commodity prices
Industry trends
Managers and Their Information
Systems
Customer Relationship management Systems
(CRM)
Help collect data about customers
Analyze the data into useful information to help serve
customers better
Help middle level managers to find effective and
efficient marketing strategies
Challenge
Address the right customer at the right time with the right
offer
Types of Information Systems
based on constituency perspective
Management Information Systems
Types of Information Systems
Transaction processing systems
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Perform and record daily routine
transactions necessary to conduct
business
Examples: sales order entry, payroll, shipping
Allow managers to monitor status of
operations and relations with external
environment
Serve operational levels
Serve predefined, structured goals and
decision making
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Transaction Processing System (TPS)
Supports Operations
Updates Operational Databases
Examples:
ATM Machine System Banking Transactions
Cash Register System Point of Sale Transactions
Accounting System Checking Account Transactions
Airline Reservation System
Payroll Processing System
Transport Ticket Reservation System
Purchase Order Entry System
Markets Tabulation System
Management Information Systems
Types of Information Systems
FIGURE 2-2
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Process Control Systems (PCS)
Supports Operations
Monitor and Control
Industrial/Manufacturing Process
Examples:
Petroleum Refining
Power Generation
Automobile Manufacturing
Enterprise Collaboration Systems (ECS)
ECS is a combination of groupware, tools, Internet,
extranets and other networks needed to support
enterprise-wide communications, such as the
sharing of documents and knowledge to specific
teams and individuals within the enterprise.
Examples:
E-mail
Chat
Video Conferencing
Workflow
File Sharing
Management Information System (MIS)
Supports Management
Analysis & Reporting
Charts, Graphs, Summary Tools
Examples:
Spreadsheet (Excel) One of the first and most basic
Oracle's Corporate Performance Management
Management Information Systems
Types of Information Systems
Management information systems
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Serve middle management
Provide reports on firms current
performance, based on data from TPS
Provide answers to routine questions
with predefined procedure for
answering them
Typically have little analytic capability
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Management Information Systems
Types of Information Systems
How Management Information Systems Obtain Their Data from the Organizations TPS
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Management Information Systems
Types of Information Systems
Sample MIS Report
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Decision Support System (DSS)
Support Management
What-if Analysis, Decision Modeling, Scenario
Building, Highly interactive.
Examples
Enterprise Decision Manager 2.0 Fair Isaac
Corporation
AIMMS 3.6
Most DSSs are custom developed for specific
companies; very few out-of-the-box products.
Management Information Systems
Types of Information Systems
Decision support systems
Serve middle management
Support non-routine decision making
Example: What is impact on production schedule if
December sales doubled?
Often use external information as well from
TPS and MIS
DSS applications are not single information
resources, such as a database or a program
that graphically represents sales figures,
but the combination of integrated
resources working together.
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Management Information Systems
Types of Information Systems
Voyage-Estimating Decision Support System
FIGURE
98
This DSS operates on a powerful PC. It is used daily by managers who must develop bids on shipping contracts.
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For example: a national on-line book seller wants to
begin selling its products internationally but first
needs to determine if that will be a wise business
decision.
The vendor can use a DSS to gather information
from its own resources (using a tool such as OLAP)
to determine if the company has the ability or
potential ability to expand its business and also
from external resources, such as industry data, to
determine if there is indeed a demand to meet.
The DSS will collect and analyze the data and then
present it in a way that can be interpreted by
humans
Executive Information Systems (EIS)
Supports high-level strategic management
Provides critical info from other systems (MIS and DSS).
Portal Concept: one place with links to all information
EISs integrate external information such as economic
developments and news about related markets and
competitors. Helps strategic decision making, not
necessarily tactical.
Tactical doing things the right way right
Strategic doing the right things
Management Information Systems
Types of Information Systems
Executive Information systems
Support senior management
Address non-routine decisions
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Requiring judgment, evaluation, and insight
Incorporate data about external events (e.g.
new tax laws or competitors) as well as
summarized information from internal MIS
and DSS
Example: Digital dashboard with real-time view of
firms financial performance: working capital,
accounts receivable, accounts payable, cash flow,
and inventory
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Management Information Systems
Enterprise Application Architecture
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Management Information Systems
Types of Information Systems
Enterprise system or Enterprise
resource planning
Collects data from different firm functions
and stores data in single central data
repository
Resolves problem of fragmented, redundant
data sets and systems
Enable:
Coordination of daily activities
Efficient response to customer orders (production,
inventory)
Provide valuable information for improving
management decision making
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Enterprise Systems
Management Information Systems
Types of Information Systems
Supply chain management (SCM)
systems
Manage firms relationships with
suppliers
Share information about
Orders, production, inventory levels,
delivery of products and services
Goal:
Right
amount of products to destination
with least amount of time and lowest cost
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Management Information Systems
Types of Information Systems
Customer relationship management
systems:
Provide information to coordinate all of
the business processes that deal with
customers in sales, marketing, and
service to optimize revenue, customer
satisfaction, and customer retention
Integrate firms customer-related
processes and consolidate customer
information from multiple communication
channels
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Management Information Systems
Types of Information Systems
Knowledge management systems
(KMS)
Support processes for acquiring, creating,
storing, distributing, applying, integrating
knowledge
How
to create, produce, distribute products
and services
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Collect internal knowledge and experience
within firm and make it available to
employees
Link to external sources of knowledge
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Management Information Systems
Types of Information Systems
Alternative tools that increase
integration and expedite the flow of
information
Intranets:
Internal
company Web sites accessible only
by employees
Extranets:
Company
Web sites accessible externally
only to vendors and suppliers
Often
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used to coordinate supply chain
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Management Information Systems
Types of Information Systems
E-business
E-commerce
Subset of e-business
Buying and selling goods and services through
Internet
E-government:
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Use of digital technology and Internet to drive
major business processes
Using Internet technology to deliver information
and services to citizens, employees, and
businesses
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Information Flow
Information
Exchange/
Communication
Enterprise Collaboration System
System
Information
Flow
Executives
Executive Information System
Managers
DSS
MIS
TPS
PCS
Operational Systems and Staff
Other categories
a) Expert systems
b) End user computing systems
c) Business information systems
d) Strategic information systems
a) Expert Systems are knowledge-based systems that provides
expert advice and act as expert consultants to the users
b) End user computing systems support the direct, hands on use of
computers by end users for operational and managerial
applications
c) Business information systems support the operational and
managerial applications of the basic business functions of a firm
d) Strategic information systems provide a firm which strategic
products, services, and capabilities for competitive advantage
Management Information Systems
The Role of Information Systems in Business Today
Growing interdependence between ability to
use information technology and ability to
implement corporate strategies and achieve
corporate goals
Business firms invest heavily in information
systems to achieve six strategic business
objectives:
1.
2.
3.
4.
5.
6.
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Operational excellence
New products, services, and business models
Customer and supplier intimacy
Improved decision making
Competitive advantage
Survival
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Management Information Systems
The Role of Information Systems in Business Today
Operational excellence:
Improvement of efficiency to attain
higher profitability
Information systems, technology
an important tool in achieving
greater efficiency and productivity
Walmarts RetailLink system links
suppliers to stores for superior
replenishment system
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Management Information Systems
The Role of Information Systems in Business
Today
New products, services, and
business models:
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Business model: describes how
company produces, delivers, and sells
product or service to create wealth
Information systems and technology
a major enabling tool for new
products, services, business models
Examples: Apples iPod, iTunes, iPhone,
iPad, Googles Android OS
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Management Information Systems
The Role of Information Systems in Business Today
Customer and supplier intimacy:
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Serving customers well leads to customers
returning, which raises revenues and
profits
Example: High-end hotels that use computers
to track customer preferences and use to
monitor and customize environment
Intimacy with suppliers allows them to
provide vital inputs, which lowers costs
Example: J.C.Penneys information system
which links sales records to contract
manufacturer
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Management Information Systems
The Role of Information Systems in Business Today
Improved decision making
Without accurate information:
Managers must use forecasts, best guesses, luck
Leads to:
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Overproduction, underproduction of goods and services
Misallocation of resources
Poor response times
Poor outcomes raise costs, lose customers
Example: Verizons Web-based digital
dashboard to provide managers with realtime data on customer complaints, network
performance, line outages, etc.
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Management Information Systems
The Role of Information Systems in Business
Today
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Competitive advantage
Delivering better performance
Charging less for superior products
Responding to customers and
suppliers in real time
Examples: Apple, Walmart
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Management Information Systems
The Role of Information Systems in Business Today
Survival
Information technologies as
necessity of business
May be:
Industry-level changes, e.g. Citibanks
introduction of ATMs
Governmental regulations requiring
record-keeping
Examples:
Toxic Substances Control Act,
Sarbanes-Oxley Act
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Management Information Systems
The Role of Information Systems in Business Today
The Interdependence Between Organizations and Information Technology
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