LECTURE - 1

FOUNDATIONS OF
INFORMATION SYSTEMS
IN BUSINESS

James A. O'Brien, and George Marakas

Management Information Systems
 
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Foundation Concepts
• Why study information systems and information
technology?
• Vital component of successful businesses
• Helps businesses expand and compete
• Improves efficiency and effectiveness of business processes
• Facilitates managerial decision making and workgroup
collaboration
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What is a System? What is an Information

System?
System
•A set of interrelated components
•With a clearly defined boundary
•Working together
•To achieve a common set of objectives

Information System
•An organized combination of…
• People, Hardware and software
• Communication networks
• Data resources
• Policies and procedures
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System/Information System
• This system…
• Stores, retrieves, transforms, and disseminates information in an
organization

Example of Information Systems

• Smoke signals for communication
• Card catalog in a library
• The cash register
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Types of Information Systems

• Operations Support Systems
• Efficiently process business transactions
• Control industrial processes
• Support communication and collaboration
• Update corporate databases

• Management Support Systems

• Provide information as reports and displays
• Give direct computer support to managers during decision-making
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Purposes of Information Systems

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Operations Support Systems (OSS)

• What do they do?
• Efficiently process business transactions
• Control industrial processes
• Support communications and collaboration
• Update corporate databases
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Types of OSS
• Transaction Processing Systems
• Record and process business transactions
• Example: sales processing, inventory systems, accounting systems
• Process Control Systems
• Monitor and control physical processes
• Example: using sensors to monitor chemical processes in a
petroleum refinery
• Enterprise Collaboration Systems
• Enhance team and workgroup communication
• Example: email, video conferencing
• Specialized Processing Systems
• Takes on many of the characteristics of one or more of the
conventional models.
• Tend to be applied when a narrowly defined software engineering
approach is chosen.
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Management Support Systems

• What do they do?
• Provide information and support for effective decision making by
managers
• Management information systems
• Decision support systems
• Executive information systems
• Specialized Processing systems
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Types of Management Support Systems

• Management Information Systems (MIS)
• Reports and displays
• Example: daily sales analysis reports
• Decision Support Systems (DSS)
• Interactive and ad hoc support
• Example: a what-if analysis to determine where to spend advertising
dollars
• Executive Information Systems (EIS)
• Critical information for executives and managers
• Example: easy access to actions of competitors
• Specialized Processing Systems (SPS)
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What is E-Business?
• Using Internet technologies to empower…
• Business processes
• Electronic commerce
• Collaboration within a company
• Collaboration with customers, suppliers, and other business
stakeholders
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How E-Business is Being Used

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Meaning of Internet, Intranet and

Extranet
• Internet
• This is the world-wide network of computers accessible to anyone who knows
their Internet Protocol (IP) address - the IP address is a unique set of numbers
(such as 209.33.27.100) that defines the computer's location.
• Intranet
• This is a network that is not available to the world outside of the Intranet. If the
Intranet network is connected to the Internet, the Intranet will reside behind a
firewall and, if it allows access from the Internet, will be an Extranet. The firewall
helps to control access between the Intranet and Internet to permit access to the
Intranet only to people who are members of the same company or organization.
 Extranet
• An Extranet is actually an Intranet that is partially accessible to authorised
outsiders. The actual server (the computer that serves up the web pages) will
reside behind a firewall.
Firewall is a network security system, either hardware- or software-based, that uses
rules to control incoming and outgoing network traffic.
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E-Business Use
• Reengineering
• Internal business processes

• Enterprise collaboration systems

• Support communications, coordination and coordination among
teams and work groups
• Electronic commerce
• Buying, selling, marketing, and servicing of products and services
over networks
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What Should Business Professionals Know?

• Foundation Concepts: Underlie the field of information
systems.  Understanding system concepts will help you understand many
other concepts in the technology, applications, development, and
management of information systems. 
• Information Technologies: Major concepts, developments, and
management issues in information technology—that is, hardware, software,
networks, data management, and many Internet-based technologies.
• Business Applications: The major uses of information systems for the
operations, management, and competitive advantage of a business.
• Development Processes: How business professionals and information
specialists plan, develop, and implement information systems to meet
business opportunities.
• Management Challenges: The challenges of effectively and ethically
managing information technology at the end-user, enterprise, and global
levels of a business.
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What Should Business Professionals

Know?
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Fundamental Roles of IS in
Business
• Support of Business Processes and Operations: As a consumer, we regularly encounter information
systems that support the business processes and operations at the many retail stores where we shop.
Example of supported business processes include activities such as sales transactions, inventory
ordering, and payroll processing.

• Support of Business Decision Making: Information systems also help store managers and other
business professionals make better decisions. For example, decisions about what lines of merchandise
need to be added or discontinued and what kind of investments they require are typically made after an
analysis provided by computer-based information systems. This function not only supports the decision
making of store managers, buyers, and others, but also helps them look for ways to gain an advantage
over other retailers in the competition for customers.

• Support of Strategies for Competitive Advantage: Gaining a strategic advantage over competitors
requires the innovative application of information technologies. For example, store management might
make a decision to install touch-screen kiosks in all stores, with links to the e-commerce Web site for
online shopping. This offering might attract new customers and build customer loyalty because of the
ease of shopping and buying merchandise provided by such information systems. Thus, strategic
information systems can help provide products and services that give a business a comparative
advantage over its competitors.
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Fundamental Roles of IS in Business

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Questions
1. What is a System and what is an Information System?
2. Graphically represent what Should Business Professionals Know.
3. Sketch the Fundamental Roles of IS in Business.
4. Sketch How E-Business is Being Used?
5. Differentiate among Internet, Intranet and Extranet.
6. What are the different Types of Operations Support Systems (OSS),
and Management Support Systems (MSS)?