Chapter

1
Foundations of
Information Systems
in Business

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 What is a System?

Definition:
A group of interrelated components, with
a clearly defined boundary, working
together toward a common goal by
accepting inputs and producing outputs in
an organized transformation process.

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 System Components

• Input – capturing and assembling

elements that enter the system to be
processed

• Processing – transformation steps that

convert input into output

• Output – transferring elements that have

been produced by a transformation
process to their ultimate destination
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Information Systems: Turn Data into Information

Data Information
• Raw material • Processed material
• Unformatted information • Formatted information
• Generally has no context • Data given context

Individual time cards for Examples Department Labor Report,

factory workers entered Project Status Report,
into the payroll system Employee Payroll Checks

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 Cybernetic Systems

“The scientific study of control and

communication in the animal and the
machine.“ – Norbert Wiener
Cybernetics is a transdisciplinary approach
for exploring regulatory systems, their
structures, constraints, and possibilities. 
Cybernetics is relevant to the study of
systems, such as mechanical, physical,
biological, cognitive, and social systems.
"control of any system using technology."
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 Cybernetic Systems

Definition:
System with feedback and control function;
a self-monitoring, self-regulating system.

• Feedback – data about the performance

of a system
• Control – monitoring and evaluating
feedback to determine whether a system
is moving toward the achievement of its
goal
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Example of a Cybernetic System

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A Business System

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IS Resources & Activities

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 Information System Resources

• People – end users and IS specialists

• Hardware – physical devices and

materials used in information processing
including computer systems, peripherals,
and media

• Software – sets of information processing

instructions including system software,
application software and procedures
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Information Systems Resources (con’t)

• Data – facts or observations about

physical phenomena or business
transactions

• Network – communications media and

network infrastructure

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 Data vs. Information

• Data – raw facts or observations typically

about physical phenomena or business
transactions

• Information – data that have been

converted into a meaningful and useful
context for specific end users

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 Network Resources

• Communications Media – examples

include twisted-pair wire, coaxial and
fiber-optic cables, microwave, cellular,
and satellite wireless technologies

• Network Infrastructure – examples include

communications processors such as
modems and internetwork processors,
and communications control software
such as network operating systems and
Internet browser packages.
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 Information Systems Activities

• Input of Data Resources

• Processing of Data into Information
• Output of Information Products
• Storage of Data Resources
• Control of System Performance

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 Why Study Information Systems?

• Information technology can help all kinds

of businesses improve the efficiency and
effectiveness of their business processes,
managerial decision making, and
workgroup collaboration, thus
strengthening their competitive positions
in a rapidly changing marketplace.

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 Why Study Information Systems

• Internet-based systems have become a

necessary ingredient for business
success in today’s dynamic global
environment.

• Information technologies are playing an

expanding role in business.

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 What is an Information System?

Any organized combination of people,

hardware, software, communications
networks, and data resources that stores,
retrieves, transforms, and disseminates
information in an organization.

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Roles of IS in Business

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Types of Information Systems

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 Operation Support Systems

Definition:
• Information systems that process data
generated by and used in business
operations
• Goal is to efficiently process business
transactions, control industrial processes,
support enterprise communications and
collaboration, and update corporate
databases

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 Examples of Operations Support Systems

• Transaction Processing Systems (TPS) –

process data resulting from business
transactions, update operational databases, and
produce business documents.

• Process Control Systems (PCS) – monitor and

control industrial processes.

• Enterprise Collaboration Systems – support

team, workgroup, and enterprise
communications an collaboration.
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 Management Support Systems

Definition:
• Information systems that focus on
providing information and support for
effective decision making by managers

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 Management Support Systems

• Management Information Systems (MIS) –

provide information in the form of pre-specified
reports and displays to support business decision
making.

• Decision Support Systems (DSS) – provide

interactive ad hoc support for the decision
making processes of managers and other
business professionals.

• Executive Information Systems (EIS) – provide

critical information from MIS, DSS, and other
sources tailored to the information needs of
executives.
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 Operational & Managerial IS

• Expert Systems – provide expert advice

for operational chores or managerial
decisions

• Knowledge Management Systems –

support the creation, organization, and
dissemination of business knowledge to
employees and managers

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 IS Classifications by Scope

• Functional Business Systems – support basic

business functions

• Strategic Information Systems – support

processes that provide a firm with strategic
products, services, and capabilities for
competitive advantage

• Cross-functional Information Systems –

integrated combinations of information systems

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Management Challenges & Opportunities

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 Measures of Success

• Efficiency
• Minimize costs
• Minimize time
• Minimize the use of information resources

• Effectiveness
• Support an organization’s business strategies
• Enable its business processes
• Enhance its organizational structure and culture
• Increase the customer business value of the
enterprise

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 Case :- JetBlue and the Veterans
Administration : Critical Importance of IT
Processes

• Jet Blue
• Good IT processes are as important as hardware
and software
• Smaller and less critical processes have large
ramifications
• Crisis in 2007
• Information system developed in 24 hours
• Implemented as a full-time system in the company
• Veterans Administration
• System failure took down key applications
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