MIS Summary - CH 1.6.9.10

CH 1
7/21/22, 10:29 PM Section 1.1: Bullet Text Study Guide
Section 1.1: Bullet Text Study Guide Chapter Contents
The Role of Information Systems in Business Today
Information technology and systems have revolutionized firms and industries, becoming the largest
component of capital investment in the U.S. and many industrialized societies. Investment in information
technology accounts for approximately 50 percent of all capital invested in the United States.

Figure 1-1

FIGURE 1-1 INFORMATION TECHNOLOGY CAPITAL INVESTMENT

Information technology capital investment, defined as hardware, software, and communications

equipment,
grew from 34% to 50% between 1980 and 2004.

Source: Based on data in U.S. Department of Commerce, Bureau of Economic Analysis, National Income and
Product Accounts, 2006.
Information systems are transforming business and the visible results of this include the increased use of
cell phones and wireless telecommunications devices, a massive shift toward online news and information,
booming e-commerce and Internet advertising, and new federal security and accounting laws that address
issues raised by the exponential growth of digital information. The Internet has also drastically reduced
the costs of businesses operating on a global scale.

These changes have led to the emergence of the digital firm, a firm in which:
Most of the firm's significant business relationships with customers, suppliers, and
employees are digitally enabled and mediated.

Core business processes, or logically related business tasks, are accomplished through
digital networks.

Key corporate assets (intellectual property, core competencies, and financial and human
assets) are managed through digital means

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Business responses to changes in their environment are enhanced through digital

communications, allowing for time shifting (business being conducted 24x7) and space
shifting (business being conducted globally or beyond traditional geographic boundaries).

Information systems are essential for conducting day-to-day business in the U.S. and most other
advanced countries, as well as achieving strategic business objectives. Some firms, such as Amazon and
E*Trade, would be nonexistent without information systems. Some service industries, such as finance,
insurance, and real estate industries, could not operate without information systems. The ability of a firm
to use IT is becoming intertwined with the firm's ability to implement corporate strategy.

Figure 1-2

FIGURE 1-2 THE INTERDEPENDENCE BETWEEN ORGANIZATIONS AND

INFORMATION
SYSTEMS

There is a growing interdependence between a firm’s information systems and its business
capabilities. Changes
in strategy, rules, and business processes increasingly require changes in
hardware, software, databases, and
telecommunications. Often, what the organization would like to
do depends on what its systems will permit it to
do.
Business firms invest heavily in information systems to achieve six strategic business objectives:
1. Operational excellence: Efficiency, productivity, and improved changes in business

practices and management behavior

2. New products, services, and business models: A business model describes how a
company produces, delivers, and sells a product or service to create wealth. Information
systems and technologies create opportunities for products, services, and new ways to
engage in business.

3. Customer and supplier intimacy: Improved communication with and service to

customers raises revenues, and improved communication with suppliers lowers costs.

4. Improved decision making: Without accurate and timely information, business managers
must make decisions based on forecasts, best guesses, and luck, a process that results in
over and under-production of goods, raising costs, and the loss of customers.

5. Competitive advantage: Implementing effective and efficient information systems can

allow a company to charge less for superior products, adding up to higher sales and profits
than their competitors.

6. Survival: Information systems can also be a necessity of doing business. A necessity may
be driven by industry-level changes, as in the implementation of ATMs in the retail banking
industry. A necessity may also be driven by governmental regulations, such as federal or
state statutes requiring a business to retain data and report specific information.

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Perspectives on Information Systems
An information system is a set of interrelated components that collect or retrieve, process, store, and distribute
information to support decision making and control in an organization. Information systems can also be used
to analyze problems, visualize complex subjects, and create new products.
Information is data, or raw facts, shaped into useful form for humans.

Figure 1-3

FIGURE 1-3 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.
Input, processing, and output are the three activities in an information system that produce the information an
organization needs. Input captures or collects raw data from within the organization or from its external
environment. Processing converts this raw input into a meaningful form. Output transfers the processed
information to the people who will use it or to the activities for which it will be used. Information systems also
require feedback, which is output that is returned to appropriate members of the organization to help them
evaluate or correct the input stage.

Figure 1-4

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FIGURE 1-4 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.
It is important to distinguish information systems, which are designed to produce information and solve
organizational problems, from the computer technology and software that is typically used to create and
manage information systems.

Computer literacy focuses primarily on knowledge of information technology. Information systems literacy, the
understanding of information systems, includes a behavioral and technical approach to understanding the
broader organization, management, and information technology dimension of systems and their power to
provide solutions. The field of management information systems (MIS) tries to achieve this broader information
systems literacy.

Figure 1-5

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FIGURE 1-5 INFORMATION SYSTEMS ARE MORE THAN COMPUTERS

Using information systems effectively requires an understanding of the organization, management,
and information technology
shaping the systems. An information system creates value for the firm as
an organizational and management solution to
challenges posed by the environment.
The dimensions of information systems include organizations, management, and information technology.

The key elements of an organization are its people, structure, business processes, politics, and culture. An
organization coordinates work through a structured hierarchy and formal standard operating procedures.
Managerial, professional, and technical employees form the upper levels of the organization's hierarchy while
lower levels consist of operational personnel.

Figure 1-6

FIGURE 1-6 LEVELS IN A FIRM

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.
Senior management makes long-range strategic decisions and ensures the firm's financial performance. Middle
management carries out the plans of senior management and operational management monitors the firm's daily
activities. Knowledge workers such as engineers and scientists design products and create and distribute new
knowledge for the organization. Data workers such as secretaries process the organization's paperwork.
Production or service workers produce the products or services.

Experts are employed for the major business functions: the specialized tasks performed by organizations,
which consist of sales and marketing, manufacturing and production, finance and accounting, and human
resources.

An organization coordinates work through its hierarchy and business processes. These processes may be
documented and formal, or informal, unwritten work processes, such as how to handle a telephone call.

Each organization has a unique culture, or fundamental set of assumptions, values, and ways of doing things,
that are accepted by most of its members. Parts of an organization's culture can be found in its information
systems. For example, UPS's organizational focus on customer service can be found in the package tracking
system available to customers. Information systems may also reflect the organizational politics or conflicts
that result from differing views and opinions in an organization.

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Information systems are also a key component in the ability of management to make sense of the challenges
facing a company and in management's ability to create new products and services, manage the company, and
even re-create the organization from time to time.

Information technology is one of the many tools used by management to cope with change. A firm's
information technology (IT) infrastructure is a technology platform or foundation on which a firm can build its
information systems. IT infrastructure consists of:

Computer hardware: The physical equipment and computing devices used for input, storage, processing,
output, and telecommunications
Computer software: The detailed, preprogrammed instructions that control and coordinate the computer
hardware components

Data management software: The software governing the organization of data on physical storage media

Networking and telecommunications technology: Hardware and software used to link the various pieces of
hardware and transfer data from one physical location to another; a computer network links two or more
computers together to share data, such as files, images, sounds, video, or share resources, such as a
printer.

The Internet is the world's largest and most widely used network. The Internet is a global network that uses
universal technology standards to connect many private and public networks. The universal standards and
technologies used in the Internet are also used in systems and networks within the firm. Intranets are internal
corporate networks based on Internet technology, and extranets are corporate networks extended to
authorized users outside of the firm.

The World Wide Web is a service provided by the Internet that uses universally accepted standards for storing,
retrieving, formatting, and displaying information in a page format on the Internet. Web pages contain text,
graphics, animations, sound, and video and are linked to other Web pages. The Web can serve as the
foundation for new kinds of information systems such as UPS's Web-based package tracking system

From a business perspective, an information system is an important instrument for creating value for the firm.
Information systems enable the firm to increase its revenue or decrease its costs by providing information that
helps managers make better decisions or that improves the execution of business processes.

Every business has an information value chain in which raw data is systematically acquired and then
transformed through various stages that add value to that information. The value of an information system to
a business, as well as the decision to invest in any new information system, is, in large part, determined by
the extent to which the system will lead to better management decisions, more efficient business processes,
and higher firm profitability.

Figure 1-7

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FIGURE 1-7 THE BUSINESS INFORMATION VALUE CHAIN

From a business perspective, information systems are part of a series of value-adding activities for acquiring, transforming,
and distributing information that managers can use to improve decision making, enhance organizational performance,
and
ultimately increase firm profitability.
The business perspective calls attention to the organizational and managerial nature of information systems.
An information system represents an organizational and management solution based on information
technology to a challenge or problem posed by the environment.

Some firms achieve better results from their information systems than others. Studies of returns from
information technology investments show that there is considerable variation in the returns firms receive.
Reasons for lower return on investment include failure to adopt the right business model that suits the new
technology or seeking to preserve an old business model that is doomed by new technology.

Figure 1-8

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FIGURE 1-8 VARIATION IN RETURNS ON INFORMATION TECHNOLOGY INVESTMENT
Although, on average, investments in information technology produce returns far above those
returned by other investments,
there is considerable variation across firms.

Source: Erik Brynjolfsson and Lorin M. Hitt, "Beyond Computation: Information Technology, Organizational Transformation and
Business Performance." Journal of Economic Perspectives14, no. 4 (Fall 2000).
Information technology investments cannot make organizations and managers more effective unless they are
accompanied by complementary assets: assets required to derive value from a primary investment. For
instance, to realize value from automobiles requires complementary investments in highways, roads, gasoline
stations, repair facilities, and a legal regulatory structure to set standards and control drivers.

Complementary investments include:
Organizational assets: These include a supportive business culture that values efficiency and
effectiveness, an appropriate business model, efficient business processes, decentralization of authority,
highly distributed decision rights, and a strong information system (IS) development team.

Managerial assets: These include strong senior management support for change, incentive systems
that monitor and reward individual innovation, an emphasis on teamwork and collaboration, training
programs, and a management culture that values flexibility and knowledge.

Social assets: These are not made by the firm but by the society at large, other firms, governments,
and other key market actors, such as the Internet, educational systems, network and computing
standards, regulations and laws, and the presence of technology and service firms.

Research indicates that firms that support their technology investments with investments in complementary
assets, such as new business processes or training, receive superior returns. These investments in
organization and management are also known as organizational and management capital.
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Contemporary Approaches to Information Systems
Information systems are sociotechnical systems. Although they are composed of machines,
devices, and "hard" physical technology, they require substantial social, organizational, and
intellectual investments to make them work properly. Since problems with information systems—
and their solutions—are rarely all technical or behavioral, a multidisciplinary approach is needed.

Figure 1-9

FIGURE 1-9 CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

The study of information systems deals with issues and insights contributed from technical and behavioral
disciplines.
The technical approach emphasizes mathematically based, normative models to study information
systems, as well as the physical technology and formal capabilities of these systems. The
behavioral approach, a growing part of the information systems field, does not ignore technology,
but tends to focus on non-technical solutions concentrating instead on changes in attitudes,
management and organizational policy, and behavior.

MIS combines the work of computer science, management science, and operations research with
a practical orientation toward developing system solutions to real-world problems and managing
information technology resources. It is also concerned with behavioral issues surrounding the
development, use, and impact of information systems, which are typically discussed in the fields
of sociology, economics, and psychology

In the sociotechnical view of systems, optimal organizational performance is achieved by jointly

optimizing both the social and technical systems used in production. Adopting a sociotechnical
systems perspective helps to avoid a purely technological approach to information systems.

Technology must be changed and designed, sometimes even "de-optimized," to fit organizational
and individual needs. Organizations and individuals must also be changed through training,
learning, and planned organizational change to allow technology to operate and prosper.

Figure 1-10
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FIGURE 1-10 A SOCIOTECHNICAL PERSPECTIVE ON INFORMATION SYSTEMS

In a sociotechnical perspective, the performance of a system is optimized when both the technology
and the
organization mutually adjust to one another until a satisfactory fit is obtained.
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CH 6
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Organizing Data in a Traditional File Environment
Computer systems organize data in a hierarchy that begins with bits and bytes and progresses to
more complex groupings of data:
Fields: Group of characters, words, or a complete number

Records: Group of related fields, describes an entity (a person, place or thing about which
information must be kept - each characteristic of an entity is an attribute

File: Group of records of the same type

Database: Group of related files

Figure 6-1
FIGURE 6-1 THE DATA HIERARCHY
A computer system organizes data in a hierarchy that starts with the bit, which represents either a 0 or a 1. Bits
can be grouped to form a byte to represent one character, number, or symbol. Bytes can be
grouped to form a
field, and related fields can be grouped to form a record. Related records can be
collected to form a file, and
related files can be organized into a database.
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In most organizations, the traditional approach to information processing meant that databases
and other systems tended to grow independently without a company-wide plan. Accounting,
finance, manufacturing, human resources, and sales and marketing all developed their own
systems and data files.

Figure 6-2
FIGURE 6-2 TRADITIONAL FILE PROCESSING

The use of a traditional approach to file processing encourages each functional area in a corporation
to develop
specialized applications and files. Each application requires a unique data file that is likely
to be a subset of the
master file. These subsets of the master file lead to data redundancy and inconsistency,
processing inflexibility,
and wasted storage resources.
Problems resulting from the traditional file environment include:
Data redundancy: duplicate data in multiple files, leading to data inconsistency, different
values used for the same attribute

Program-data dependency: Changes in programs requiring changes to the data

Lack of flexibility

Poor security

Lack of data sharing

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The Database Approach to Data Management
Database technology eliminates many of the problems of traditional file organization by organizing data: centralizing data
and controlling redundant data, and serve many applications and different groups at the same time.

A database management system (DBMS) is software that:
Acts as as an interface between application programs and the data files

Separates the logical view of the database (how the data is perceived by end users) and the physical view (how the
data is actually organized on storage media). It also allows different logical views for different users.

Helps to reduce data redundancy and eliminate data inconsistency by allowing a central, shared data source

Figure 6-3

FIGURE 6-3 HUMAN RESOURCES DATABASE WITH MULTIPLE VIEWS

A single human resources database provides many different views of data, depending on the information requirements of the user. Illustrated
here are two possible views, one of interest to a benefits specialist and one of interest to a member of the company’s payroll department.
A relational DBMS, such as Microsoft Sequel Server or MYSQL, represents data as two-dimensional tables called relations.
Each table consists of a grid of columns and rows of data. Each row is a record, or tuple, divided by columns into separate
fields for that record. One column in each table acts as a primary key, defining for each record a key field that is used to
uniquely identify each record. Relational databases use primary keys to connect records from one table to other tables.
When a primary key from one table is used in second table to locate, or look-up, records from the first table, it is called a
foreign key.

Figure 6-4

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FIGURE 6-4 RELATIONAL DATABASE TABLES

A relational database organizes data in the form of two-dimensional tables. Illustrated here are tables for the entities SUPPLIER and PART
showing how they represent each entity and its attributes. Supplier_Number is a primary key for the SUPPLIER table and a foreign key for the
PART table.
In a relational database, three operations are used to develop sets of data:
Select: Creates a subset of data of records that meet stated criteria

Join: Combines relational data from different tables

Project: Creates a subset of a table using only specified columns
Figure 6-5

FIGURE 6-5 THE THREE BASIC OPERATIONS OF A RELATIONAL DBMS

The select, project, and join operations enable data from two different tables to be combined and only selected attributes to be displayed.
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Older, less flexible types of database systems include hierarchical DBMS, which model one-to-many relationships, and
network DBMS, which model many-to-many relationships. Hierarchical and network
Relational DBMS are suited for handling data, not graphics or multimedia. An object-oriented DBMS (OODBMS) stores the
data and procedures that act on those data as objects that can be automatically retrieved and shared, and can manage
multimedia and java applets. However, OODBMS are slower in handling large numbers of transactions. Hybrid object-
relational DBMS systems are now available to provide capabilities of both object-oriented and relational DBMS.
A DBMS includes capabilities and tools for accessing and managing data in a database, including:
Data definition language or capability: Used to specify the structure of the database content, creating and defining
tables and fields
Data dictionary: An automated or manual file that stores definitions of data elements and their characteristics
Data manipulation language: a specialized language, such as Structured Query Language, or SQL, that is used to add,
change, delete, and retrieve the data in the database
Figure 6-6, Figure 6-7, Figure 6-8
FIGURE 6-6 SAMPLE DATA DICTIONARY REPORT

The sample data dictionary report for a human resources database provides helpful information, such
as the size of the data element, which
programs and reports use it, and which group in the organization
is the owner responsible for maintaining it.
FIGURE 6-7 EXAMPLE OF AN SQL QUERY

Illustrated here are the SQL statements for a query to select suppliers for parts 137 or 150.
They produce a list with the same results as Figure
6-5.
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FIGURE 6-8 AN ACCESS QUERY

Illustrated here is how the query in Figure 6-7 would be constructed using query-building tools in the
Access Query Design View. It shows the
tables, fields, and selection criteria used for the query.
A DBMS may also include capabilities for generating customized reports and developing desktop system applications.
Considerations in designing a database include its:
Physical design: How the database is arranged on storage devices

Conceptual, or logical design: How the data elements are organized for efficiency, meeting information
requirements, and minimizing redundancy

Normalization is the process of creating small, stable, yet flexible and adaptive data structures from complex groups of data
and minimizes repeated data groups.

Figure 6-9, Figure 6-10

FIGURE 6-9 AN UNNORMALIZED RELATION FOR ORDER

An unnormalized relation contains repeating groups. For example, there can be many parts and suppliers for each order. There is only a
one-to-
one correspondence between Order_Number and Order_Date.
FIGURE 6-10 NORMALIZED TABLES CREATED FROM ORDER

After normalization, the original relation ORDER has been broken down into four smaller relations.
The relation ORDER is left with only two
attributes and the relation LINE_ITEM has a combined, or
concatenated, key consisting of Order_Number and Part_Number.
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An entity-relationship diagram is used to diagram a data model and describe the relationships between different groups of
data in the system. Without an appropriate data model for its databases, a database system will not be able to serve a
business effectively.

Figure 6-11
FIGURE 6-11 AN ENTITY-RELATIONSHIP DIAGRAM

This diagram shows the relationships between the entities ORDER, LINE_ITEM, PART, and SUPPLIER
that might be used to model the database
in Figure 6-10.
Database design also considers how the data are to be distributed, with a centralized database or with a distributed
database (data that is stored in more than one physical location). There are two main methods of distributing a database:

Partitioned: Different parts of the database are stored in separate locations

Replicated: The database is duplicated at all locations
Figure 6-12
FIGURE 6-12 DISTRIBUTED DATABASES

There are alternative ways of distributing a database. The central database can be partitioned (a) so
that each remote processor has the
necessary data to serve its own local needs. The central database
also can be replicated (b) at all remote locations.
Distributed systems:
Reduce vulnerability

Increase responsiveness

May introduce unwanted data or definitions, or stray from standards

Pose security problems

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Using Databases to Improve Business Performance and Decision-Making
Businesses use their databases to:
Keep track of basic transactions

Provide information that will help the company run the business more efficiently

Help managers and employees make better decisions

In a large company, special capabilities and tools are required for analyzing vast quantities of data
and for accessing data from multiple systems, such as:
Data warehouse: a database that stores current and historical data from core operational
transactional systems for use in management analysis, but this data cannot be altered.

Data mart: A subset of a data warehouse in which a summarized or highly focused portion of
the organization's data is placed in a separate database for a specific population of users.

Business intelligence (BI) tools: Data analysis tools used for consolidating, analyzing, and
accessing vast stores of data to help in decision making, such as software for database
query and reporting, tools for multidimensional data analysis (online analytical processing),
and data mining.


FIGURE 6-13 COMPONENTS OF A DATA WAREHOUSE

The data warehouse extracts current and historical data from multiple operational systems inside the
organization. These data are combined with data from external sources and reorganized into a central
database
designed for management reporting and analysis. The information directory provides users
with information
about the data available in the warehouse.
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FIGURE 6-14 BUSINESS INTELLIGENCE

A series of analytical tools works with data stored in databases to find patterns and insights for helping
managers and employees make better decisions to improve organizational performance.
Online Analytical Processing (OLAP) supports multidimensional data analysis, enabling users to
view the same data in different ways using multiple dimensions, for example: How many
dishwashers were sold in the East in June.

Figure 6-15

FIGURE 6-15 MULTIDIMENSIONAL DATA MODEL

The view that is showing is product versus region. If you rotate the cube 90 degrees, the face that will
show is
product versus actual and projected sales. If you rotate the cube 90 degrees again, you will
see region versus
actual and projected sales. Other views are possible.
Data mining finds hidden patterns and relationships and infers rules from these to predict future
behavior. The types of information obtainable from data mining include
Associations
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Sequences
Classifications
Clustering
Forecasting
Predictive analysis uses data mining techniques, historical data, and assumptions about future
conditions to predict outcomes of events, such as the probability a customer will respond to an
offer or purchase a specific product.

Databases can be linked to the Web by using middleware software products, allowing users or
clients to access corporate data through a Web browser interface. Such software might consist of
an application server, a custom software program, or CGI (common gateway interface) scripts. In
a client/server environment, the DBMS might reside on a special dedicated computer called a
database server. Web interfaces are easy to use and require few or no changes to the internal
database.

Figure 6-16

FIGURE 6-16 LINKING INTERNAL DATABASES TO THE WEB

Users access an organization’s internal database through the Web using their desktop PCs and Web
browser
software.
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Managing Data Resources
An information policy specifies the organization's rules for sharing, disseminating, acquiring,
standardizing, classifying, and inventorying information, and includes procedures and
accountabilities and roles.

Data administration is responsible for the specific policies and procedures through which data can
be managed as an organizational resource. Responsibilities include developing information policy,
planning for data, overseeing logical database design and data dictionary development, and
monitoring how information systems specialists and end-user groups use data. Large
organizations often require a formal data administration function.

Data governance deals with the policies and processes for managing the availability, usability,
integrity, and security of the data employed in an enterprise, with special emphasis on promoting
privacy, security, data quality, and compliance with government regulations.

A large organization will also have a database design and management group that is responsible
for defining and organizing the structure and content of the database, and maintaining the
database. The functions it performs are called database administration.

In managing data, steps must be taken to ensure that the data in organizational databases are
accurate and remain reliable. Data that are inaccurate, untimely, or inconsistent with other
sources of information lead to incorrect decisions, product recalls, and even financial losses.

A good database design also includes efforts to maximize data quality and eliminate error. Some
data quality problems result from redundant and inconsistent data, but most stem from errors in
data input. Organizations need to identify and correct faulty data and establish better routines for
input and editing.

A data quality audit can be performed by surveying entire data files, sample data, and surveying
end-users impressions of data quality. Data cleansing (or data scrubbing) techniques can be used
to correct data and enforce consistency among different sets of data.
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Managing Data Resources
An information policy specifies the organization's rules for sharing, disseminating, acquiring,
standardizing, classifying, and inventorying information, and includes procedures and
accountabilities and roles.

Data administration is responsible for the specific policies and procedures through which data can
be managed as an organizational resource. Responsibilities include developing information policy,
planning for data, overseeing logical database design and data dictionary development, and
monitoring how information systems specialists and end-user groups use data. Large
organizations often require a formal data administration function.

Data governance deals with the policies and processes for managing the availability, usability,
integrity, and security of the data employed in an enterprise, with special emphasis on promoting
privacy, security, data quality, and compliance with government regulations.

A large organization will also have a database design and management group that is responsible
for defining and organizing the structure and content of the database, and maintaining the
database. The functions it performs are called database administration.

In managing data, steps must be taken to ensure that the data in organizational databases are
accurate and remain reliable. Data that are inaccurate, untimely, or inconsistent with other
sources of information lead to incorrect decisions, product recalls, and even financial losses.

A good database design also includes efforts to maximize data quality and eliminate error. Some
data quality problems result from redundant and inconsistent data, but most stem from errors in
data input. Organizations need to identify and correct faulty data and establish better routines for
input and editing.

A data quality audit can be performed by surveying entire data files, sample data, and surveying
end-users impressions of data quality. Data cleansing (or data scrubbing) techniques can be used
to correct data and enforce consistency among different sets of data.
CH 9
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Enterprise Systems
Enterprise systems, or enterprise resource planning (ERP) systems, integrate the key internal
business processes of a firm into a single software system so that information flows seamlessly
throughout the organization, improving coordination, efficiency, and decision making.
Enterprise software is based on a suite of integrated software modules and a common central
database. The database collects data from and feeds the data into numerous applications that
supports nearly all of an organization's internal business activities. When new information is
entered by one process, the information is made available immediately to other business
processes.
Figure 9-1
FIGURE 9-1 HOW ENTERPRISE SYSTEMS WORK

Enterprise systems feature a set of integrated software modules and a central database that enables
data to be
shared by many different business processes and functional areas throughout the
enterprise.
Enterprise software is built around thousands of predefined business processes that reflect best
practices. Best practices are the most successful solutions or problem-solving methods in an
industry for consistently and effectively achieving a business objective.
Organizations implementing commercial enterprise software first select the business processes
they wish to use from the software and map their own processes to these, using the software's
configuration tables. Although businesses may choose to rewrite portions of the software to match
their existing processes, this can degrade system performance and fail to reap the benefits of this
software.
Enterprise systems produce value by increasing organizational efficiency and by providing

firmwide information to help managers make better decisions. Enterprise systems create a
foundation for a more customer-driven organization by integrating firm data to enable quicker
responses to customer requests and information.
Enterprise systems:
Use analytical tools to evaluate a firm's overall performance
Use standard definitions, formats, and performance figures across the organization 1/2
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Supply Chain Management Systems
Supply chain management refers to the coordination of activities and involved in making and moving a product. The
supply chain is the network of businesses and business processes involved the creation and selling of a product, from
suppliers that procure raw materials through retail outlets and customers. The upstream portion of the supply chain
includes the organization's suppliers and the processes for managing relationships with them. The downstream portion
consists of the organizations and processes for distributing and delivering products to the final customers. The
manufacturer also has internal supply chain processes for transforming the materials and services furnished by
suppliers into finished goods and for managing materials and inventory.

Figure 9-2
FIGURE 9-2 NIKE’S SUPPLY CHAIN

This figure illustrates the major entities in Nike’s supply chain and the flow of information upstream and downstream to coordinate the
activities involved in buying, making, and moving a product. Shown here is a simplified supply chain, with the upstream portion focusing
only on the suppliers for sneakers and sneaker soles.
Inefficiencies in the supply chain, such as parts shortages, underutilized plant capacity, excessive inventory, or
runaway transportation costs, are caused by inaccurate or untimely information and can waste as much as 25% of
operating costs. Uncertainties also arise because many events cannot be foreseen—product demand, late shipments
from suppliers, defective parts or raw material, or production process breakdowns. More accurate information from
supply chain management systems reduces uncertainty and the impact of the bullwhip effect, in which information
about the demand for a product gets distorted as it passes from one entity to the next across the supply chain. With
perfect information about demand and production, a firm can implement an effective just-in-time strategy, delivering
goods in the right amount and as they are needed.

Figure 9-3
7/21/22, 10:30 PM chapter 9
FIGURE 9-3 THE BULLWHIP EFFECT

Inaccurate information can cause minor fluctuations in demand for a product to be amplified as one moves further back in the supply
chain. Minor fluctuations in retail sales for a product can create excess inventory for distributors, manufacturers, and suppliers.
Supply chain software can be classified as either:
Supply chain planning systems: Systems which enable the firm to generate demand forecasts for a product,
develop sourcing and manufacturing plans for that product, make adjustments to production and distribution
plans, and share that information with relevant supply chain members. One of the most important supply chain
planning functions is demand planning, which determines how much product a business needs to make to satisfy
all of its customers' demands.

Supply chain execution systems: Systems that manage the physical flow of products through distribution centers
and warehouses to ensure that products are delivered to the right locations in the most efficient manner.
Before the Internet, supply chain coordination was hampered by the difficulties of making information flow smoothly
among disparate internal supply chain systems. Today, using intranets and extranets, all members of the supply chain
can instantly communicate with each other, using up-to-date information to adjust purchasing, logistics,
manufacturing, packaging, and schedules. The Internet provides a standard set of tools that are used by companies all
over the world to coordinate global supply chains that include participants from many countries

Figure 9-4
7/21/22, 10:30 PM chapter 9
FIGURE 9-4 INTRANETS AND EXTRANETS FOR SUPPLY CHAIN MANAGEMENT

Intranets integrate information from isolated business processes within the firm to help manage its
internal supply chain. Access to these
private intranets can also be extended to authorized suppliers,
distributors, logistics services, and, sometimes, to retail customers to
improve coordination of external
supply chain processes.
Earlier supply chain management systems were driven by a push-based model (also known as build-to-stock) in which
production master schedules are based on forecasts or best guesses of demand for products, and products are
"pushed" to customers. With Web-based tools, supply chain management follows a pull-based model (or demand-
driven model or build-to-order), in which actual customer orders or purchases trigger events in the supply chain.

Figure 9-5
FIGURE 9-5 PUSH-VERSUS PULL-BASED SUPPLY CHAIN MODELS

The difference between push- and pull-based models is summarized by the slogan “Make what we
sell, not sell what we make.”
Internet technology also makes it possible to move from sequential supply chains, where information and materials
flow sequentially from company to company, to concurrent supply chains, where information flows in many directions
simultaneously among members of a supply chain network. Ultimately, the Internet could create a "digital logistics
nervous system" throughout the supply chain to permit simultaneous, multidirectional communication of information
about participants' inventories, orders, and capacities.

7/21/22, 10:30 PM chapter 9
Figure 9-6
FIGURE 9-6 THE FUTURE INTERNET-DRIVEN SUPPLY CHAIN

The future Internet-driven supply chain operates like a digital logistics nervous system. It provides
multidirectional communication
among firms, networks of firms, and e-marketplaces so that entire
networks of supply chain partners can immediately adjust inventories,
orders, and capacities.
The business value of supply chain management systems includes:
Streamlined supply chain and accurate information

Reduced supply chain costs

Increased sales through accurate product availability
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7/21/22, 10:31 PM chapter 9
Section 9.3: Bullet Text Chapter Contents
Customer Relationship Management Systems
Customers can be seen as an enterprise's most valuable asset, and customer relationship management systems
enable large firms to understand and work with their customers.

CRM systems capture and integrate customer data from all over the organization, consolidating the data, analyzing
the data, and then distributing the results to various systems and customer touch points across the enterprise. A
touch point (also known as a contact point) is a method of interaction with the customer, such as telephone, e-mail,
customer service desk, conventional mail, Web site, or retail store.

Well-designed CRM systems provide a single enterprise view of the customer and provide customers with a single
view of the company regardless of the touch point the customer uses.

Figure 9-7
FIGURE 9-7 CUSTOMER RELATIONSHIP MANAGEMENT (CRM)

CRM systems examine customers from a multifaceted perspective. These systems use a set of
integrated applications to address all
aspects of the customer relationship, including customer
service, sales, and marketing.
Good CRM systems provide data and analytical tools for determining the financial lifetime value of a customer and
customer loyalty and for identifying profitable customers and their needs.

Commercial customer relationship management (CRM) software packages range from niche tools that perform
limited functions, such as personalizing Web sites for specific customers, to large-scale enterprise applications. The
more comprehensive CRM packages contain modules for:
Partner relationship management (PRM): PRM software uses many of the same data, tools, and systems as
customer relationship management to enhance collaboration between a company and its selling partners. It
provides a company and its selling partners with the ability to trade information and distribute leads and data
about customers, integrating lead generation, pricing, promotions, order configurations, and availability.

Employee relationship management (ERM). ERM software deals with employee issues that are closely related to
CRM, such as setting objectives, employee performance management, performance-based compensation,
and employee training.

CRM systems typically provide software or tools for:
7/21/22, 10:31 PM chapter 9
Sales force automation (SFA): SFA modules help sales staff increase their productivity by focusing sales
efforts on the most profitable customers. They provide sales prospect and contact information, product
information, product configuration capabilities, and sales quote generation capabilities.

Customer service: Customer service modules provide information and tools to make call centers, help
desks, and customer support staff more efficient. They have capabilities for assigning and managing
customer service requests and may include Web-based self-service capabilities.

Marketing: Marketing modules support direct-marketing campaigns with capabilities for capturing prospect
and customer data, qualifying leads, and scheduling and tracking campaign mailings. They include tools for
analyzing marketing and customer data-identifying profitable and unprofitable customers, designing products
and services to satisfy specific customer needs and interests, and identifying opportunities for cross-selling,
up-selling, and bundling. Cross-selling is the marketing of complementary products to customers. Up-selling is
the marketing of higher-value products or services to new or existing customers. Bundling is cross-selling in
which a combination of products is sold as a bundle at a price lower than the total cost of the individual
products.

FIGURE 9-8 HOW CRM SYSTEMS SUPPORT MARKETING

Customer relationship management software provides a single point for users to manage and evaluate
marketing campaigns across
multiple channels, including e-mail, direct mail, telephone, the Web, and
wireless messages.
7/21/22, 10:31 PM chapter 9
FIGURE 9-9 CRM SOFTWARE CAPABILITIES

The major CRM software products support business processes in sales, service, and marketing,
integrating customer information
from many different sources. Included are support for both the
operational and analytical aspects of CRM.
CRM software can also be used to increase customer loyalty through customer service by identifying valued
customers and providing them with special services or offers.

Figure 9-10
FIGURE 9-10 CUSTOMER LOYALTY MANAGEMENT PROCESS MAP

This process map shows how a best practice for promoting customer loyalty through customer service would be modeled by
customer relationship management software. The CRM software helps firms identify high-value customers for preferential treatment.
CRM applications may support either:
7/21/22, 10:31 PM chapter 9
Operational CRM: Customer facing applications such as tools for sales force automation, call center and
customer service support, and marketing automation.

Analytical CRM: Applications that analyze customer data generated by operational CRM applications to provide
information for improving business performance management. Analytical CRM applications are based on data
warehouses that consolidate the data from operational CRM systems and customer touch points for use with
online analytical processing (OLAP), data mining, and other data analysis techniques. An important output of
analytical CRM is the customer lifetime value (CLTV). CLTV is based on the relationship between the revenue
produced by a specific customer, the expenses incurred in acquiring and servicing that customer, and the
expected life of the relationship between the customer and the company.
Figure 9-11
FIGURE 9-11 ANALYTICAL CRM DATA WAREHOUSE

Analytical CRM uses a customer data warehouse and tools to analyze customer data collected from
the firm’s customer touch points
and from other sources.
The business value of CRM systems includes
Increased customer satisfaction

Reduced direct-marketing costs

More effective marketing

Lower costs for customer acquisition and retention

Increased sales revenues through identifying profitable customers

Reduced churn rate: The churn rate measures the number of customers who stop using or purchasing
products or services from a company and is an important indicator of the growth or decline of a firm's
customer base.

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7/21/22, 10:31 PM chapter 8
Section 9.4: Bullet Text Chapter Contents
Management Opportunities, Challenges, and Solutions
Many firms obtain extraordinary business value from enterprise applications because of their
power to improve process coordination and management decision making.

However, enterprise systems, supply chain management, and customer relationship management
systems are very expensive to purchase and implement. Costs run even higher for organizations
with global operations, which must manage organizational and technology changes in many
different languages, time zones, currencies, and regulatory environments.

Enterprise applications require not only deep-seated technological changes but also fundamental
changes in the way the business operates, including changes to business processes, employee
responsibilities, and functions.

Enterprise applications also introduce "switching costs." Once an enterprise application is

purchased and implemented, it becomes very costly to switch vendors.

Enterprise applications require defining and implementing standardized definitions of data

throughout the organization.

Solutions for gaining more value from enterprise applications include:
Enterprise solutions (enterprise suites or e-business suites): Flexible enterprise

software that enables close linking between CRM, SCM, and enterprise systems, as well as
to customer and supplier systems.

Service platforms: A service platform integrates multiple applications from multiple

business functions, business units, or business partners to deliver a seamless experience for
the customer, employee, manager, or business partner. Enterprise-wide service platforms
provide a greater degree of cross-functional integration than the traditional enterprise
applications. To accomplish this, software tools (such as Web services and XML) use existing
applications as building blocks for new cross-enterprise processes. Portal software can
integrate information from enterprise applications and disparate in-house legacy systems,
presenting it to users through a Web interface so that the information appears to be coming
from a single source.
Figure 9-12.
7/21/22, 10:31 PM chapter 8
FIGURE 9-12 ORDER-TO-CASH SERVICE

Order-to-cash is a composite process that integrates data from individual enterprise applications and
legacy
financial applications. The process must be modeled and translated into a software system
using application
integration tools.
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CH 10
7/21/22, 10:32 PM chapter 10
Electronic Business, Electronic Commerce, and the Emerging Digital Firm
E-commerce refers to:
The use of the Internet and the Web to transact business

Digitally enabled commercial transactions between and among organizations and

individuals.

Figure 10-1
FIGURE 10-1 THE GROWTH OF E-COMMERCE

Retail e-commerce revenues have grown exponentially since 1995 and have only recently “slowed” to
a very
rapid 25 percent annual increase, which is projected to remain the same until 2008.
The rapid growth of e-commerce since 1995 is due to the unique features of the Internet and the
Web as a commercial medium:
Ubiquity: Internet/Web technology is everywhere, at work, home, and elsewhere, and

anytime, providing a ubiquitous marketspace, a marketplace removed from a temporal and
geographical location.

Global reach: The technology reaches across national boundaries.

Universal standards: There is one set of Internet technology standards, which greatly
lower market entry costs (the costs to bring goods to market) and reduce search costs (the
effort to find products) for the consumer.

Richness: Information richness refers to the complexity and content of a message. Internet
technology allows for rich video, audio, and text messages to be delivered to large numbers
of people.

Interactivity: The technology works through interaction with the user.

Information density: Information density is the total amount and quality of information
available to all market participants. Internet technology reduces information costs and
raises quality of information, enabling price transparency (the ease for consumers of finding
a variety of prices) and cost transparency (the ability of consumers to determine the actual
costs of products). Information density allows merchants to engage in price discrimination
7/21/22, 10:32 PM chapter 10
(selling goods to targeted groups at different prices).
Personalization/customization: E-commerce technologies permit personalization

(targeting personal messages to consumers) and customization (changing a product or
service based on consumer preference or history.
The Internet also shrinks information asymmetry, which occurs when one party in a transaction has
more information with respect to the transactions than the other party. For instance, the Web has
reduced the information asymmetries surrounding auto purchases.

Digital markets are very flexible and efficient because they allow:
Reduced search and transaction costs

Lower menu costs (merchant's costs of changing prices)

Price discrimination

Dynamic pricing (prices changing based on the demand characteristics of the customer or
the seller's supply situation)

Disintermediation: Elimination of intermediaries such as distributors or retailers
Figure 10-2
FIGURE 10-2 THE BENEFITS OF DISINTERMEDIATION TO THE CONSUMER

The typical distribution channel has several intermediary layers, each of which adds to the final cost of
a
product, such as a sweater. Removing layers lowers the final cost to the consumer.
The Internet digital marketplace has also greatly expanded sales of digital goods, goods that can
be delivered over a digital network. In comparison to traditional goods, the marginal cost of
producing another unit of a digital good is about zero, delivery costs over the Internet are low,
while marketing costs are about the same and pricing can be variable.

E-commerce technologies have revolutionized commerce and enabled a variety of new business
models. Some are pure-play models, based purely on the Internet. Others may be hybrid clicks-
and-mortar models, using Web sites as an extension of a traditional business, such as LLBean.com.
New business models include:
Virtual storefronts: Such as Amazon.com

7/21/22, 10:32 PM chapter 10
Information broker: Such as Realtor.com
Transaction broker: Such as E*Trade.com

Online marketplace: Such as Ebay.com

Content provider: Such as iTunes.com. The ability to deliver digital goods and digital
content over the Web has created new alternatives to traditional print and broadcast media.
Popular digital content includes online games, digital versions of print newspapers, Internet
radio, downloadable movies, online television broadcasts, Podcasting (Internet audio
broadcasts).

Online service provider: Such as Salesforce.com.

Virtual community: Such as YouTube.com; Online communities include social networking

sites, online communities used by individuals for expanding business or social contacts, and
social shopping sites, in which users swap shopping ideas.

Portal: Such as Yahoo.com. Some portals combine content from various sources, using
syndication as well providing additional value. Online syndicators aggregate content or
applications from multiple sources, package them for distribution, and resell them to third-
party Web sites
These new business models may have revenue generated from:
Sales of traditional or digital goods

Selling advertising space for banner ads and pop-up ads

Transaction fees

Sales of marketing information collected by users

Directing buyers to sellers

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7/21/22, 10:32 PM chapter 10
Electronic Commerce
The three major types of electronic commerce are:
Business-to-consumer (B2C): Retailing products and services to individual shoppers

Business-to-business (B2B): Sales of goods and services among businesses

Consumer-to-consumer (C2C): Consumers selling directly to other consumers.
Another way of classifying electronic commerce transactions is in terms of the participants'

physical connection to the Web. Conventional e-commerce transactions, which take place over
wired networks, can be distinguished from mobile commerce or m-commerce, the purchase of
goods and services using handheld wireless devices.

Marketers can use the interactive features of Web pages to hold consumers' attention or to
capture information about their tastes and interests. This information may be obtained by asking
visitors to "register" online and provide information about themselves or by using special software
such as clickstream tracking to track the activities of Web site visitors. Companies can then
analyze this information to develop more precise profiles of their customers.

Figure 10-3
FIGURE 10-3 WEB SITE VISITOR TRACKING

E-commerce Web sites have tools to track a shopper’s every step through an online store. Close
examination of
customer behavior at a Web site selling women’s clothing shows what the store might
learn at each step and
what actions it could take to increase sales.
Communications and product offerings can also be tailored precisely to individual customers. By
using Web personalization technology to modify Web pages presented to each customer,
marketers can achieve the benefits of using individual salespeople at dramatically lower costs.
Personalization can help firms form lasting relationships with customers by providing
individualized content, information and services.

Figure 10-4
7/21/22, 10:32 PM chapter 10
FIGURE 10-4 WEB SITE PERSONALIZATION

Firms can create unique personalized Web pages that display content or ads for products or services of
special
interest to individual users, improving the customer experience and creating additional value.
Collaborative filtering compares a customer's behavior with data about similar customers to predict
what the customer would like to see next and makes recommendations to users. Blogs, or
Weblogs, informal web sites where individuals, or corporate representatives and groups, can
publish views and options, have emerged as a promising Web marketing tool. New third-party
services monitor customer discussions in online communities or research online behavior of large
numbers of customers at many different web sites.

Learning what customers feel about one's products or services through electronic visits to Web
sites is much less costly than using focus groups. The Web shifts more marketing and selling
activities to the customer, as customers fill out their own on-line order forms. Mobile commerce
will provide businesses with additional channels for reaching customers and new opportunities for
personalization.

The Web and other network technologies are inspiring new approaches to customer service and
support. Companies can reduce costs and improve customer service by using Web sites to provide
helpful information as well as customer support via e-mail. Companies are realizing substantial
cost savings from Web-based customer self-service applications. New products are even
integrating the Web with customer call centers.

Much of B2B e-commerce is still based on proprietary systems for electronic data interchange
(EDI). Electronic data interchange (EDI) enables automated computer-to-computer exchange
between two organizations of standard transactions such as invoices, bills of lading, shipment
schedules, or purchase orders.

Figure 10-5
7/21/22, 10:32 PM chapter 10
FIGURE 10-5 ELECTRONIC DATA INTERCHANGE (EDI)

Companies use EDI to automate transactions for B2B e-commerce and continuous inventory replenishment.
Suppliers can automatically send data about shipments to purchasing firms. The purchasing
firms can use EDI to
provide production and inventory requirements and payment data to suppliers.
Today companies are increasingly turning to the Internet for this purpose because it provides a
much more flexible and low-cost platform for linking to other firms. For procurement (purchasing
source goods and negotiation with suppliers), businesses can use the Internet to locate low-cost
goods, place orders, make payments, etc. Businesses can create Web storefronts to sell goods,
and Internet technology to create extranets or link to other businesses for transactions.

B2B e-commerce environments include:
Private industrial networks or private exchanges: Typically consisting of a large firm using an
extranet to link to its suppliers and other key business partners.

Net marketplaces or e-hubs: Internet-based marketplaces for many different buyers and
sellers. Net marketplaces are industry owned or operate as independent intermediaries
between buyers and sellers, generating revenue from transaction fees or services to clients.
Net marketplaces may sell direct goods (used in a production process) and some sell
indirect goods. They may support contractual purchasing based on long-term relationships
with designated suppliers, and others support short-term spot purchasing, where goods are
purchased based on immediate needs, often from many different suppliers. Some net
marketplaces may serve vertical markets for specific industries or horizontal markets, with
goods and services for many industries.

Exchanges: Independently owned third-party Net marketplaces that can connect thousands
of suppliers and buyers for spot purchasing. Many exchanges provide vertical markets for a
single industry. However, many exchanges have failed because they encourage competitive
bidding that drove prices down without offering long-term relationships.
7/21/22, 10:32 PM chapter 10
FIGURE 10-6 A PRIVATE INDUSTRIAL NETWORK

A private industrial network, also known as a private exchange, links a firm to its suppliers, distributors,
and
other key business partners for efficient supply-chain management and other collaborative
commerce activities.
FIGURE 10-7 A NET MARKETPLACE

Net marketplaces are online marketplaces where multiple buyers can purchase from multiple sellers.
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7/21/22, 10:32 PM chapter 10
M-Commerce
Although m-commerce represents a small fraction of total e-commerce transactions, revenue has
been steadily growing.
Figure 10-8
FIGURE 10-8 GLOBAL M-COMMERCE REVENUE, 2000-2009

M-commerce sales represent a small fraction of total e-commerce sales, but that percentage is steadily
growing.
Source: Jupiter Research; eMarketer, 2006; eMarketer, 2005; authors.
M-commerce applications have taken off for services that are time-critical, that appeal to people
on the move, or that accomplish a task more efficiently than other methods. Popular m-commerce
applications include:
Content and location-based services: For checking travel information, schedules, news,
movie times, weather forecasts, etc
Banking and financial services: For checking account balances, transferring funds,
paying bills
Wireless advertising: Selling of advertising space in m-commerce applications, such as

sponsored search results from the go2Directory search site
Games and entertainment: Downloadable digital games, movies, music, and ringtones
Because handheld mobile devices can only display small amounts of information at a time, m-
commerce enabled Web sites are being designed as special wireless portals (mobile portals) with
content optimized for smaller screens.
Although Wi-Fi hotspots are increasing, m-commerce faces challenges such as:
Awkwardness and small screens of handheld devices
Security risks
Slow transfer speeds with second generation cell networks
Lack of standardized payment systems

7/21/22, 10:32 PM chapter 10
Electronic Commerce Payment Systems
A variety of special electronic payment systems have been developed to pay for goods
electronically on the Internet, including:

Digital credit card payment systems: These systems extend the functionality of credit cards so they
can be used for online shopping payments, providing mechanisms authentication and money
transfers.

Digital wallets: Digital wallets store credit card, electronic cash, and owner identification
information and provide that information at an e-commerce site's checkout page, making paying
for purchases over the Web more efficient by eliminating the need for shoppers to repeatedly
enter their information into order forms.

Micropayment systems: These systems use accumulated balance or stored value payment
systems for purchases of less than $10. Many m-commerce transactions are small, frequent
purchases for items such as soft drinks, sports scores, newspapers, or mobile games that require
special micropayment systems.

Accumulated balance digital payment systems allow users to make payments on the Web,
accumulating a debit balance on their credit card or telephone bills.

Stored value payment systems, including smart cards, enable users to make instant payments
based on the value stored in a digital account.

Smart cards (plastic cards that store digital information, such as health records, identification, or
financial data) can be used for micropayments in a stored value system. A smart card requires use
of a special card reading and writing device to recharge the card with cash or to transfer cash
either to an online or offline merchant.

Digital cash is currency represented in electronic form that is moving outside the normal network
of money. Users are supplied with client software and can exchange money with another e-cash
user.

Peer-to-peer payment systems serve people who want to send money to vendors or individuals
who are not set up to accept credit card payments.

Digital checking systems extend existing checking accounts by using a digital signature that can be
verified and can be used for payments in electronic commerce.

Electronic bill presentment and payment services are used for paying and managing routine monthly
bills electronically.
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CH 1

7/21/22, 10:29 PM Section 1.1: Bullet Text Study Guide

Section 1.1: Bullet Text Study Guide Chapter Contents

The Role of Information Systems in Business Today

FIGURE 1-1 INFORMATION TECHNOLOGY CAPITAL INVESTMENT

Information technology capital investment, defined as hardware, software, and communications

Business responses to changes in their environment are enhanced through digital

FIGURE 1-2 THE INTERDEPENDENCE BETWEEN ORGANIZATIONS AND

1. Operational excellence: Efficiency, productivity, and improved changes in business

3. Customer and supplier intimacy: Improved communication with and service to

5. Competitive advantage: Implementing effective and efficient information systems can

Section 1.2: Bullet Text Study Guide Chapter Contents

Perspectives on Information Systems

FIGURE 1-3 DATA AND INFORMATION

FIGURE 1-4 FUNCTIONS OF AN INFORMATION SYSTEM

FIGURE 1-5 INFORMATION SYSTEMS ARE MORE THAN COMPUTERS

FIGURE 1-6 LEVELS IN A FIRM

FIGURE 1-7 THE BUSINESS INFORMATION VALUE CHAIN

Complementary investments include:

Section 1.3: Bullet Text Study Guide Chapter Contents

Contemporary Approaches to Information Systems

FIGURE 1-9 CONTEMPORARY APPROACHES TO INFORMATION SYSTEMS

In the sociotechnical view of systems, optimal organizational performance is achieved by jointly

FIGURE 1-10 A SOCIOTECHNICAL PERSPECTIVE ON INFORMATION SYSTEMS

Section 6.1: Bullet Text Study Guide Chapter Contents

Organizing Data in a Traditional File Environment

Fields: Group of characters, words, or a complete number

File: Group of records of the same type

Database: Group of related files

FIGURE 6-1 THE DATA HIERARCHY

FIGURE 6-2 TRADITIONAL FILE PROCESSING

Problems resulting from the traditional file environment include:

Program-data dependency: Changes in programs requiring changes to the data

Lack of data sharing

Section 6.2: Bullet Text Study Guide Chapter Contents

The Database Approach to Data Management

A database management system (DBMS) is software that:

Acts as as an interface between application programs and the data files

FIGURE 6-3 HUMAN RESOURCES DATABASE WITH MULTIPLE VIEWS

FIGURE 6-4 RELATIONAL DATABASE TABLES

In a relational database, three operations are used to develop sets of data:

Select: Creates a subset of data of records that meet stated criteria

Join: Combines relational data from different tables

Project: Creates a subset of a table using only specified columns

FIGURE 6-5 THE THREE BASIC OPERATIONS OF A RELATIONAL DBMS

Figure 6-6, Figure 6-7, Figure 6-8

FIGURE 6-6 SAMPLE DATA DICTIONARY REPORT

FIGURE 6-7 EXAMPLE OF AN SQL QUERY

FIGURE 6-8 AN ACCESS QUERY

Considerations in designing a database include its:

Physical design: How the database is arranged on storage devices

Figure 6-9, Figure 6-10

FIGURE 6-9 AN UNNORMALIZED RELATION FOR ORDER

FIGURE 6-10 NORMALIZED TABLES CREATED FROM ORDER

FIGURE 6-11 AN ENTITY-RELATIONSHIP DIAGRAM

Partitioned: Different parts of the database are stored in separate locations

Replicated: The database is duplicated at all locations

FIGURE 6-12 DISTRIBUTED DATABASES

May introduce unwanted data or definitions, or stray from standards

Pose security problems

Section 6.3: Bullet Text Study Guide Chapter Contents

Using Databases to Improve Business Performance and Decision-Making

Businesses use their databases to: