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Lecture Notes - Introduction to Information Systems .pdf

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Lecture Notes - Introduction to

Information Systems

Week 1
What is IS?
● Get right information to the right people, at the right time
➔ Relevant information
● Translates raw data to useful information → process =collect, process,
store, analyse,disseminate
● Information technology is the hardware and software whereas information systems
implement the technology.
● information technology does not include the people and procedures behind the
functioning of the systems
● IT is the Hardware and Software, however the Information systems is basically IT but
including the human side of Procedures and People
● Understanding how the hardware software and users interact makes designing easy
to use software more simple

Components of Information Systems:

Difference between Information Systems and Technology?

● The difference between information systems and information technology is

that information systems incorporate the technology, people, and processes

involved with information. Information technology is the design and

implementation of information, or data, within the information system.

Why should we know about IS?

● Competitive edge → high profit margin
● Understanding how the hardware and software interact makes designing easy
to use software more simpler
● Used in all industries
● Businesses cannot function without the implementation of software in the
modern age → digitalisation of business in the 21st century

The Business Problem

● In today World software has been developed and integrated and can be
delivered globally for all industries
● Billions of people now access the Internet via broadband connections.
● Worldwide, more than 5 billion people use cell phones.
● In addition, software programming tools and Internet-based services allow
companies in many industries to launch new software-powered startups
without investing in new infrastructure or training new employees.
● In essence, software is disrupting every industry, and every organisation must
prepare for this disruption

Software Disruptions
● Replacement of services e.g. Netflix, Opal
● Online transformation
● Machine learning → user customization = better value
● Online shopping, i.e. Afterpay

Software as a service
● Delivering software through a cloud/internet based system
● Instead of installing software, it is stored virtually → virtually sustainable
● Free from complexity
● Cloud computing
● Google, Dropbox

Results
● An increasing number of major businesses and industriesare being run on
software and delivered as online services
● These services includes from motion pictures to agriculture to national
defence.

● Also, companies face constant competitive threats from both established

rivals and entrepreneurial technology companies that are developing
disruptive software.
● These threats will force companies to become more agile and to respond to
competitive threats more quickly, efficiently, and effectively.

Psychology of Colours
● Entices audiences → user specification
● Aesthetics
● Influence

Week 2
Data/Information/Knowledge
● Data
Raw fact, unorganised fact that needs to be processed and organised to convey any
specific meaning
● Information
Data that is processed by summing, ordering, averaging, grouping so that they have
meaning and value the recipient
● Knowledge
Data and/or information that have been organised and processed to convey
experience, understanding, accumulating learning and expertise

Components of IS

Process for Generating Information

● Input: Capturing raw data of information
● Processing: Converting input a meaningful form
● Output: Transferring the processed information to the people who will use it or to the
activities for which it will be used

E.g Hotel Reservation

IT Inside Organisation

Information Systems that function among multiple organisations

Major Capabilities of IS
● Perform high-speed, high-volume computations
● Provide fast, accurate communication and collaboration within and among
organisations
● Store huge amounts of information in an easy-to-access, yet small space
● Allow quick and inexpensive access to vast amounts of information, worldwide
● Interpret vast amounts of data quickly and efficiently
● Automate both semiautomatic business processes and manual tasks

How does IT impact Organisations?

● One of the most important tasks of managers is making decisions
● IT often provides managers with near-real-time information, meaning that
managers have less time to make decisions, making their jobs even more stressful
● Fortunately, IT also provides many business analytics tools-such as dashboards,
search engines, and intranets-to help managers handle the volume of information
they must deal with on an ongoing basis.

Week 3
Why do companies have Information Systems?

● Improve decision making → timely, relevant, complete

● Assure all managers work with the same types of data → consistency
● Competitive edge

Transaction Processing Systems (TPS)

● Transaction: any event that generates data worthy of being captured
- Examples → product manufacturing, services, hiring, payroll check generated

● TPS supports the monitoring, collection, storage, and processing of data from the
organisation's basic business transactions, each of which generates data
● TPS collects data continuously, typically in real time and it provides the input data for
the corporate databases

Integration of a firm's TPS

Side note : the flow of key places of information from one TPS to another for a typical
manufacturing organisation. TPSs can be designed so that the flow of information from one
system to another is automatic and requires no manual intervention or reentering of data.
Such a set of systems is called an integrated information system. Many organisations have
limited or no integration among their TPSs. In this case, data input to one TPS must be
printed out and manually reentered into other systems. Of course, this increases the amount
of effort required and introduces the likelihood of processing delays and errors.

The complexities of transactional data

● When processing a transaction involves more than one computer, the database and
all users must be protected against inconsistencies arising from a failure of any other
component at any time.
● E.g. an error at some point in an ATM withdrawal can enable a customer to receive
cash, although the bank's computer indicates that he or she did not

How TPS Processes Data

TPS processes data in one of two basic ways:
1. Batch processing system
● Business transactions are accumulated over a period of time and prepared for
processing as a single unit or batch
○ Essential characteristic: delay between event and processing of
related transaction to update records
2. Online transaction processing
● Each transaction is processed immediately
○ Data in an online system reflects current status
○ Many find OLTP enables faster, more efficient service

Decision Support Systems (DSS)

● What-if Analysis process of determining the effects on outcomes/output in a model
through changes in input
● Sensitive analysis allows us to understand how different inputs values and their
probability of occurrence.
● Goal seeking occurs when the decision maker has a specific outcome in mind and
needs to determine how it can be achieved.
● Enables middle managers to analyse large amount of detailed data from different
internal and external sources and support their decision making
● Analysing complex relationships among thousands or even millions of data to
discover patterns, trends is one of the key uses associated with DSS.

Executive Support Systems (ESS)

What level of managers can be served with these Information systems (ESS)
● Serve senior managers
ESS Support
● Strategic decision making
○ E.g., What products should we make in five years?
● Non routine decision making
ESS Use portal with Web interface, or digital dashboard, to present content

Reports
● All information systems produce three main reports:
1. Routine Reports: are produced at scheduled intervals. They range from
hourly quality control reports to daily reports on absenteeism rates.
2. Ad-hoc (on-demand) reports:
- Drill-down reports
- Key-Indicator reports
- Comparative reports
3. Exception reports include only information that falls outside certain threshold
standards: performance standards

Drill-Down Reports

Key-Indicator Reports
● Key-indicator reports summarise the performance of critical activities. E.g. a chief
financial officer might want to monitor cash flow and cash on hand

● Brand awareness ● Contribution margin

● Customer engagement ● Liquidity ratio
● Marketing spend per customer ● Interest cover
● Days in accounts receivables
● Return on marketing investment
● Net cash flow
● Lifetime value of a customer
● Gross profit margin
● Customer acquisition cost ● Transactions error rate
● Customer retention

Marketing Metrics Financial Metrics

Exception Reports

Expert Reports

Components
- Knowledge base
- Inference engine
- UI

Participant in Expert Systems Development

● Domain expert: person or group with the expertise or knowledge the expert system is
trying to capture
● Knowledge engineer : person who has training or experience in the design ,
development, implementation, and maintenance of an expert system
● Knowledge user : person or group who uses and benefits from the expert system
- Needs no previous training or experience
Components of Knowledge Base
● Knowledge representation : It is the method used to organise and formalise the
knowledge in the knowledge base. It is in the form of IF-THEN-ELSE rules
● Knowledge Acquisition: The success of any expert system majorly depends on the
quality, completeness, and accuracy of the information stored in the knowledge base
● The knowledge base is formed by readings from various experts, scholars, and the
Knowledge Engineers. The knowledge engineer is a person with the qualities of
empathy, quick learning, and case analysing skills.

Knowledge Representation

Supply Change Management Systems

SCM Support and Facilitate:

● Relationships with suppliers, purchasing firms, distributors, an logistics companies
● Managing shared information about orders, production, inventory levels
● Coordinating business processes that deal with customers in sales, marketing, and
customer service.

Enterprise Resource Planning Systems

● Functional area information systems were developed independently of one another
● ERP systems are designed to correct a lack of communication among the functional
area IS
● ERP systems tightly integrate the function area IS via a common database
● The leading ERP software vendor is SAP

Benefits and Limitations of ERP Systems

Benefits Limitations

Organisational flexibility and agility Companies may need to change their

existing business processes

Facilitating decision making ERP systems can be complex, expensive

Improving quality and efficiently Time-consuming to implement

Week 4
Competitive Advantage
- Essential to organisation survival and success
- Competitive advantage can be gained by managing business processes → more
profitable compared to competitors
- Cost, quality, speed → not easily imitable by competitors = control and lead in market
and larger profits

Business Process
● Ongoing collection of related activities that create a product or a service of value to
the organisation, business partners or customers.
○ Process is comprised of three fundamental elements:
- Inputs : Materials, service, information that flow and are transformed as
a result of process activities
- Resources : people and equipment that perform process activities
- Outputs : product or service created

Measures of competitive performance

● How does an organisation ensure business process excellence?
● Measures of competitive performance?
- Customer satisfaction
- Cost reduction
- Cycle and fulfilment reduction
- Quality
- Differentiation
- productivity

Market Pressures - Globalisation

● Globalisation Pressure operating on an international scale
● Organisations should apply approaches to compete in international markets
● IS enable organisations to respond to pressure and to compete in International scale
○ E-Business and E-Commerce
○ Customer relation management systems; self-service systems

Market Pressures - Changing Nature of Workforce

● Workforce is becoming more Diversified
○ SIngle parents
○ Persons with disabilities

● IS is easing the integration of these employers into traditional workforce

○ IS support Telecommuting Employees
○ IS support speech - and vision-recognition capabilities

Market Pressures - Powerful Customers

● Increasing consumer sophistication and expectation
● Consumer become more knowledgeable about
○ Products and service
○ Price comparisons
● Is can help organisations to respond pressure generated by powerful customers
enhance customer intimacy
○ Customer relationship management systems
○ Business intelligence systems

Technology Pressures
Technological Innovation & Obsolescence Information Overload

● IS enabled organisation to respond to pressure:

○ Rapid development of both new and substitute products & services
○ Vast stores of data, info and knowledge that creates difficulty for
decision-making

● Intelligent data management systems

● Business process management systems

Societal/Legal/Political Pressures
● IS enable organisations to respond to societal/legal/political pressures
● IS support and facilitate
○ Social responsibility
○ Compliance with Govt. regulations
○ Protection against terrorist attacks

Business IT Alignment
● Organisations should provide Business-IT Alignment. Tight integration of the IT
functions with the strategy, missions and goals of the organisation.
● Characteristics of good business-IT alignment:
○ Organisations view IT as an engine of innovation
○ Organisations rotate business and IT professionals across departments
○ Organisations provide overarching goals that are completely clear to each IT
and business employee

Porter's Competitive Forces Model

Porter's Value Chain Model

● Organisations use the Porter Competitive Model to design general strategies
● To identify specific activities where they can use the competitive strategies for
greatest impact, they use his value chain model (1985)
● A value chain is a sequence of activities through which the organisation's inputs are
transformed into more valuable outputs
● The value chain model identifies points where an organisation can use information
technology to achieve competitor advantage

Porter's 5 competitive forces

Threat High Low

New market entrants Market entry is easy Significant barrier to enter

the market

Suppliers (bargaining Buyers (companies) have Buyers (companies) have

power) few choices many choices

Customers (bargaining Buyers (customers) have Buyers (customers) have

power) many choices few choices

Substitute products/services There are many substitutes There are few substitutes

(Established) competitors Intense competition among Less intense competition

many firms among few firms

Porter's Value Chain Model

Strategies for Competitive Advantage

● Cost Leadership
○ Produce products at lower costs
○ Inventory costs = low = lower price
○ E.g. Huawei - low cost, high quality
● Differentiation
○ Offer different products, services or features than competition
○ E.g. Apple(Steve Jobs) - minimalist design, high price but high quality
● Innovation
○ Introduce new features to existing products
○ E.g. Tesla - electric car, no carbon emission, enviro-friendly
● Operational Effectiveness
○ Improve manner in which business is conducted internally
○ Increases quality of products and services
● Customer Oriented
○ Making customers happy
○ Personalisation

Porter's Generic Strategies

Week 5
Why System Acquisition and Development
● Where does an organisation start when looking to acquire or develop supporting IS?
● How can you work with IS personnel to get the information systems you need to
succeed on the job or in your own business?

System Development
● Set of activities involved in building IS to meet users' needs
● Projects can range from small to large (e.g. nuclear science research to video game
development)

IS planning process
● Analyse the organisations strategic plan
○ Identify the firm's mission, goals,
and steps required to reach these goals
● Develop the IS strategic plan
○ Develop a set of goals that describe IT
infrastructure, and resources needed to
reach the organisation goals
● Develop IS operational plan
○ Develop a set of IS projects that will be
executed to support the IS strategic plan

IT steering committee
● Comprised of a group of managers and staff who represent the various
organisational units

● Critical components in developing and implementing the IS strategic plan

Group of managers and staff establish IT priorities
● To approve the allocation of resources
● To ensure that the IS function is meeting organisation's needs

Strategies for Acquiring IT Applications

● Purchase pre written IT applications
● Customise pre written IT applications
● Custom-write an entire application (write all new computer code)
● Lease the application (use application service providers and software-as-a-service
vendors)
● Employ custom development

Subscribe vs. Buy vs. Build

Buying Off-The-Shelf Software

Software as a Service (SaaS)

● SaaS is a method of delivering software in which a vendor hosts the applications
and provides them as a service to customers over network, typically over the internet
● Customers do not own the software; rather, they pay for using it. SaaS eliminates
the need for customers to install and run the application on their own computers

Empoy custom development Systems Development

● Business Knowledge
● Technical Skills
● Non-technical human relations skills
○ Interview skills, group dynamic skills
○ Skills to develop job descriptions and to train staff

Why is System Development difficult?

● System development is Difficult and risky, hence development methodologies have
emerged to facilitate the process
● Systems development life cycle (SDLC) is one of the most common methods

Waterfall Approach: Software package implementation process

SDLC: Systems Investigation

● Understanding needs of business that can be addressed by new system
● Define goals of the new system
● Ensuring feasibility
● Forming a project team

SDLC: Systems Investigation/ feasibility

● Technical feasibility
- It checks whether the existing technical resources can support the candidate
system or not or up to what extent it supports
● Economic feasibility
- To determine the benefits and savings that are expected from a candidate
system and compare them with costs
● Behavioural feasibility
- Addresses the human issues of the systems development project

Evaluating and Justifying IT investment

● Assessing the costs
○ Fixed costs among different IT projects
○ Costs for maintaining, debugging and
improving the system
● Assessing the benefits
○ Tangible (refers to items that can be
measured in dollars) and Intangible
(e.g. improvement of employee morale,
employees' job satisfaction) benefits

What are Requirements?

● System Requirements
○ Functional
○ Non-functional
● Functional Requirements - the activities the system must perform
○ Business uses, functions user carry out
● Non-functional requirements - other system characteristics
○ Constraints and performance goals

FURPS+ Requirements
● Functional requirements
● Usability requirements
● Reliability requirements
● Performance requirements
● Security requirements
● Even more categories

SDLC: Systems Design

● Describes technical system's specifications based on approved user requirements
 ● Deliverable:
○ A set of technical system specifications (hardware, software etc)
● Technical specifications include:
○ System outputs, inputs, and UI
○ Hardware, software, databases, telecommunications, personnel, procedures
○ A blueprint of how these components are integrated

SDLC: Programming & Testing

● Translating design specs into code
● Quality assurance - professional costructs test plan

SDLC: Implementation
● The process of converting a old computer system to a new one
● Major conversion strategies
○ Direct
○ Pilot
○ Phased
○ Parallel

Week 6
Data and Knowledge Management
● Stay competitive
● An effective Info System need to provide information to stay relevant and organised
○ Accurate info is free of error
○ Information is timely
○ Relevant information - useful and appropriate for types of work and decisions
that require it

Why Managing Data is Important

● Amount of data is increasingly exponential
● Data are subject to data rot (out-dated, irrelevant, destroyed storage)
● Inconsistent - non-integrated info systems

Retailing Example

Establish Data Governance

● Insurance that data standards and policies are defined and enforced
● Making data available, transparent and useful for those who are authorised to access
it

What is a Database?
● A collection of data stored electronically

Hierarchy of Data

Advantages/ Database approach

Data Cube
● Data are organised by subject - customer, vendor, product, price
● Differs from transactional systems

Big Data
● Large and complex data collections
● Old software, hardware and analysis processes are unable to deal with them
● Four characteristics of Big Data
○ Volume - relates to huge amounts of data generated by IT systems
○ Velocity - speed of transmission around the globe
○ Variety - many types of data generated (financial, social media feed etc)
○ Veracity - messiness of data (speech patterns, tweets with hashtags, typos)

Benefits of Big Data

● Helps organisations to gain value
● Improves performance

Data Warehouse and Marts

● Data Warehouse
○ Central repositories of data from disparate sources.
○ Both historic and current data
● Data mart
○ Low cost, scaled down version of warehouses
○ Designed for end-user's needs in individual department

Knowledge Management

The Role of IT in KM
● Knowledge creation, capture, refine, storage manage and disseminate knowledge
● Both explicit and tacit knowledge

Week 7
Managers and Decision Making
All managers perform three basic roles:
● Interpersonal roles: figurehead, leader, liaison
● Informational roles: monitor, disseminator, spokesperson, analyser
● Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator

Decision making major phases

● Intelligence phase: managers examine a situation and identify and define the
problem or opportunity
● Design phase: decision makers construct a model for the situation. They do this by
making assumptions that simplify reality and by expressing the relationships among
all the relevant variables. Managers then validate the model by using test data.
● Choice phase involves selecting a solution or course of action that seems best
suited to resolve the problem.

Why Managers Need IT Support

Decision making is difficult due to the following trends:
● The number of alternatives is constantly increasing, due to innovations in
technology, improved communications, the development of global markets, and the
use of the Internet and e-business.
● Most decisions must be made under time pressure. It often is not possible to
manually process information fast enough to be effective.
● Due to increased uncertainty in the decision environment, decisions are becoming
more complex.
● It often is necessary to rapidly access remote information, consult with experts, or
conduct a group decision-making session, all without incurring large expenses.

A Framework for Computerised Decision Analysis

Problem Structure
● Structured : deal with routine and repetitive problems
for which standard solutions exist.

● Unstructured decisions : there is no standardised

procedure for carrying out any of the three phases.

● Semi-structure d: Located between structured and

unstructured decisions are semi structured decisions,
in which only some of the decision process phases are
structured.

Nature of Decisions
Strategic planning: the long-range goals and policies for
growth and resource allocation.

Management control: acquiring and using resources

efficiently in accomplishing organisational goals.

Operational control: executing specific tasks efficiently

and effectively.

Business Intelligence
● Data Warehouses & Data Marts BI encompasses not only applications, but also
technologies and processes.
● It includes both "getting data in" (to a data mart or warehouse) and "getting data out"
(through BI applications).

The use of BI in organisations varies considerably.

● In smaller organisations, BI may be limited to Excel spreadsheets.
● In larger ones, BI often is enterprise wide, and it includes applications such as data
mining/predictive analytics, dashboards, and data visualisation.

BI Targets

● The development of one or a few relatedBI applications

○ This BI target often is a point solution for a departmental need, such as
campaign management in marketing.
○ Sponsorship, approval, funding, impacts, and benefits typically occur at
the departmental level.
○ For this target, organisations usually create a data mart to store the
necessary data.

● The development of infrastructure to support enterprise wide BI

○ A crucial component of BI at this level is an enterprise data warehouse.
○ Because it is an enterprise wide initiative, senior management often
provides sponsorship, approval, and funding.
○ In addition, the impacts and benefits are felt throughout the organisation.

● Support for organisational transformation.

○ With this target, BI is used to fundamentally transform the ways in which a
company competes in the marketplace.
○ BI supports a new business model, and it enables the business strategy.
○ Because of the scope and importance of these changes, critical
elements such as sponsorship, approval, and funding originate at the
highest organisational levels.
○ The impact on personnel and processes can be significant, and the
benefits are organisation wide.

BI Applications
1. Multidimensional Analysis or Online Analytical Processing (OLAP)
○ OLAP involves "slicing and dicing" data stored in a dimensional format,
drilling down in the data to greater detail, and aggregating the data.
2. Data Mining
○ Data mining refers to the process of searching for valuable business
information in a large database, data warehouse, or data mart.
○ Data mining can perform two basic operations:
i. Predicting trends and behaviors,

ii. Identifying previously unknown patterns.

○ BI applications typically provide users with a view of what has
happened; data mining helps to explain why it is happening, and it predicts
what will happen in the future.
3. Decision Support Systems
○ Decision support systems (DSSs) combine models and data in an attempt to
analyse semi-structured problems and some unstructured problems that
involve extensive user involvement. Models are simplified representations, or
abstractions, of reality.
○ DSSs enable business managers and analysts to access data
interactively, to manipulate these data, and to conduct appropriate analyses.
○ They have the related capabilities of
1. Sensitivity analysis
2. What- if analysis
3. Goal-seeking analysis

Sensitivity Analysis
● Decision variables: "What is our reorder point for these raw materials?
● Environmental variables: (external to the organisation): "What will the rate of
inflation be?"

● Companies generally perform a sensitivity analysis to determine the impact of

environmental variables analysis.
● Sensitivity analysis is extremely valuable because it enables the system to adapt to
changing conditions and to the varying requirements of different decision-making
situations.
● It provides a better understanding of the model as well as of the problem that the
model purports to describe

What-If Analysis
● A model builder must make predictions and assumptions regarding the input data,
many of which are based on the assessment of uncertain futures.
● The results depend on the accuracy of these assumptions, which can be
highly subjective.
● Attempts to predict the impact of a change in the assumptions (input data) on the
proposed solution.

Goal-Seeking Analysis
● Goal-Seeking Analysis represents a "backward" solution approach.
● It attempts to calculate the value of the inputs necessary to achieve a desired level of
output.

Week 8

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