Foundation Of Information

Systems In Business

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 1

Learning Objectives:
 Understand the concept of a system and how
it relates to information systems.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 2

What Is An Information System?
 An Information System can be any organized
combination Of:
- people,
- hardware,
- software,
- communications networks,
- policies.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 3

What Is An Information System?
(continued)
 People rely on modern information systems to
communicate using a variable:
- physical devices (hardware).
- information processing instruction and
procedures (software).
- communications channels (network).
- stored data (data resources).

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 4

Examples Of Information Systems:
 Smoke signals for communication
 Card catalog in a library
 The cash register

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 5

Real World Case:
Heidelberg: Using IT To Build Smart Products And Services

 Consider Heidelberger Druckmaschinen AG of

Germany, the number one maker of high end end
printing presses for printers and print media
producers throughout the world. For all of its long
history, the company has offered repair services to its
customers.

Several years ago, Heidelberg developed the ability

to monitor its equipment remotely using built in
sensors, networking microprocessors, and other
information technologies.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 6

Real World Case:
Heidelberg: Using IT To Build Smart Products And Services
(continued)

Heidelberg soon found that it could provide

maintenance much more cost effectively with the smart
products.

Now with its machines communicating continuously

over the internet, relaying information about their status
between the print shops and Heidelberg’s regional and
global technical support specialists, the company has
the access and insight to optimize printing performance
in customer’s shops and minimize maintenance and
repair costs for Heidelberg as well as its customers.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 7

Real World Case:
Heidelberg: Using IT To Build Smart Products And Services
(continued)

With such smart services, Heidelberg now offers total

supports of its products, which for example, can extend
even to the removal and resale of its machines.

Thus the self monitoring and networking capabilities

built into its products provide a strategy opportunity for
Heidelberg to use information technology to become a
partner in the successful operations of its customers,
while reducing its costs and creating new sources of
revenue from smart services.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 8

Real World Case:
Heidelberg: Using IT To Build Smart Products And Services
(continued)

Questions:
 Why should manufacturing companies build
smart products and provide smart services?

What business benefits can be gained?

Provide several examples beyond discussed
in this case

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 9

Real World Case:
Heidelberg: Using IT To Build Smart Products And Services
(continued)

Questions (continued)
 What information technologies are used by the
companies in this case to build smart products and
provide smart services?

 What are some limitations of a smart products and

smart services strategies?

 Use the internet to investigate how Heidelberg, is

proceeding in its use of smart products and services.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 10

Computer Based Information System
& Information Technologies:
1. Computer hardware technologies.
2. Computer software technologies.
3. Telecommunications network technologies.
4. Data resource management technologies.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 11

The Major Areas Of Information Systems
Knowledge Needed By Business Professionals

1. Foundation concepts.
concept about the components and roles of
information systems.

2. Information technologies.
hardware, software, networks, data
management, many internet based
technologies.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 12

The Major Areas Of Information Systems
Knowledge Needed By Business Professionals
(continued)
3. Business applications.
operations, management, competitive advantage of
a business.

4. Development processes.
plan, develop, and implement information systems
to meet business opportunities.

5. Management challenges.
the challenges of effectively and ethically managing
information technology at end user, enterprise, and
global levels of a business.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 13

The Fundamental Roles Of
Information System In Business
There are three fundamental reasons:
1. Support of its business processes and
operations.
2. Support of decision making by its employees
and managers.
3. Support of its strategies for competitive
advantage.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 14

Trends In Information Systems:
1. Data processing: 1950s – 1960s
- electronic data processing systems
-- transaction processing, record keeping,
and traditional accounting applications.

2. Management reporting: 1960s – 1970s

- management information systems
-- management reports of pre specified
information to support decision making.
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 15
Trends In Information Systems
(continued):
3. Decision support: 1970s – 1980s
- decision support systems

4. Strategic and User Support: 1980s – 1990s

- end user computing systems
- executive information systems
- expert systems
- strategic information systems

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 16

Trends In Information Systems
(continued):
4. Electronic Business and Commerce: 1990s
– 2000s
- internet based e business and e
commerce systems

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 17

The Role Of “E Business” In Business
 Many business today are using internet
technologies to Web enable business
process and to create innovative e business
application.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 18

The Role Of E Business In Business
(continued)
 E business:
the use of internet technologies to work and
empower business process, electronic
commerce, and enterprise collaboration
within a company and with its customers,
suppliers, and other business stakeholders.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 19

Business Today

Company
Boundary
Supply chain management:
procurement, distribution, and
logistics
Internet
Engineering
Manufacturing and Accounting
and research
production and finance

Internet
Customer relationship management:
Marketing, Sales, Customer Service

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 20

Business Today (continued)

Suppliers and other

business partners

Extranets

Company
Boundary

Extranets
Consumers and business
customers
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 21
Business Today (continued)
 Intranet:
the internet and internet like networks inside
the enterprise.

 Extranet:
the internet and internet like networks
between an enterprise and its trading
partners.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 22

Business Today (continued)
 Electronic commerce:
the buying, selling, marketing, and servicing
of products, services, and information over a
variety of computer networks.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 23

Types Of Information Systems

Information Systems

Operations Support Management

Systems Support Systems

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 24

Types Of Information Systems
(continued)

Operations
Support
Systems

Specialized Transaction Process Enterprise

Processing Processing Control Collaboration
Systems Systems Systems Systems

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 25

Types Of Information Systems
(continued)

Management
Support
Systems

Management Decision Executive Specialized

Information Support Information Processing
Systems Systems Systems Systems

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 26

Types Of Information Systems
(continued)
 Operations support systems:
- Transaction processing systems
-- process data resulting from business
transactions, update operational
databases, and produce business
documents.
Examples: Sales and inventory,
processing and accounting
systems.
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 27
Types Of Information Systems
(continued)
 Operations support systems (continued):
- Process control systems.
-- minor and control industrial process.
Examples: Petroleum refining, power
generation, steel producing
systems.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 28

Types Of Information Systems
(continued)
 Operations support systems (continued):
- Enterprise collaboration systems.
-- support team, workgroup, and enterprise
communications and collaboration.
Examples: email, chat, video
conferencing groupware
systems.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 29

Types Of Information Systems
(continued)
 Management support systems:
- Management information systems
-- provide information in the form of pre
specified reports and displays to support
business decision making.
Examples: Sales analysis,
production performance,
cost trend reporting systems.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 30

Types Of Information Systems
(continued)
 Management support systems (continued):
- Decision support systems
-- provide interactive ad hoc support for the
decision making processes of managers
and other business professionals.
Examples: product pricing,
profitability forecasting,
risk analysis.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 31

Managerial Challenges Of Information
Technology

The Business
Enterprise: Information Customer Value
Strategies/Processes Technology Business Value
/Structure/Culture
Business/IT
Business/IT Business/IT
Goals
Challenges Developments

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 32

Managerial Challenges Of Information
Technology (continued)

Business/IT
Business/IT Challenges Developments Business/IT Goals

•Speed and flexibility

* Use of the
requirements of product •Give customers
internet,
development, what they want,
intranets,
manufacturing, and when and how they
extranets, and
delivery cycles, want it, at the
the WEB
lowest cost
•Integration of e
business and e • Coordination of
commerce into the manufacturing and
organization’s business process
strategies, process, with suppliers and
structure, and culture customers
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 33
Developing Information System (IS)
Solutions

Investigate Analyze

Design

Maintain Implement

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 34

The IS (Information System)
Functions:
 A major functional area of business equally
as important to business success, as the
function of:
- accounting,
- finance,
- operations management,
- marketing,
- human resource management.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 35

The IS (Information System)
Functions (continued):
 An important contributor to:
- operational efficiency,
- employee productivity,
- customer service and satisfaction.

 A major source of information and support

needed to promote effective decision making
by managers and business professionals.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 36

The IS (Information System)
Functions (continued):
 A vital ingredient in developing competitive
products and services that give an
organization a strategic advantage in the
global market place.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 37

Foundation Concepts: The
Components Of Information Systems:
 Technology:
the computer network are systems of information
processing component that use a variety of:
hardware,
software,
data management,
and telecommunication network technologies.

 Applications:
the electronic business and commerce applications
involve interconnected business information systems.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 38

Foundation Concepts: The Components Of
Information Systems (continued):
 Development:
that developing ways to use information
technology in business includes designing the
basic components of information system.

 Management:
the managing information technology
emphasizes the quality, strategic business
value, security.
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 39
What Is A System?
Systems have three basic functions:
1. Input:
Involves capturing and assembling elements
that enter the system to be processed.
Example: - raw materials,
- energy,
- data.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 40

What Is A System? (continued)
Systems have three basic functions (continued):
2. Processing:
involves transformation processes that convert input
into output.
Example: - manufacturing process,

3. Output:
involves transferring elements that have been
produced by a transformation process to their
ultimate destination.
Example: - finished products,
- human services
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 41
Stakeholders In The Business
Environment

CONTROL

Management

FEEDBACK

Information System

Economic Business Process: Goods and Services:

Resources: people,
money, material,
machines, land,
facilities, energy,
information
INPUT
Financial Institutions, Labor Unions, Stockholders, Customers, Competitors, The Community,
Government Agencies, Suppliers
market, develop, products, services,
produce, and payments, contributions,
deliver, products information, other effects
and services,
support customers,
OUTPUT
other processes
PROCESSING

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 42

Components Of An Information
System

PEOPLE RESOURCES (end users and IS specialists); SOFTWARE RESOURCES (programs and
procedures); HARDWARE RESOURCES (machines and media); NETWORK RESOURCES
(communications media and network support); DATA RESOURCES (data and knowledge bases);

SYSTEM ACTIVITIES
Control System Performance

Input Of Data Processing Output Of

Resources Data Into Information
Information Products

Storage Of Data Resources

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 43

Examples Of Information System
Resources And Products

Information Systems Resources And

Products

People Network
Resources Resources

Hardware Software Data Information

Resources Resources Resources Products

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 44

Information Systems Resources And
Products
 People resources:
- specialist (system analysts, software
developers, system operators).
- end users (anyone else who uses
information systems).

 Hardware resources:
- machines (computers, video monitor, magnetic disk
drives, printers, optical scanners).
- media (floppy disks, magnetic tape, optical disks,
plastic cards, paper forms).
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 45
Information Systems Resources And
Products (continued)
 Software resources:
- programs (operating system program, spreadsheet
programs, word processing programs).
- procedures (data entry procedures, error correction
procedures).

 Data resources:
- product description, customer records, employee
files, inventory databases.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 46

Information Systems Resources And
Products (continued)
 Network resources:
- communications media, communication
processors, network access and control
software.

 Information products:
- management reports and business
documents using text and graphics displays,
audio responses, and paper forms.
Ir. Muhril Ardiansyah, M.Sc., Ph.D. 47
Business Examples
INFORMATION SYSTEM ACTIVITIES

 Input. (optical scanning of bar coded tags on

merchandise)
 Processing. (calculating employee pay, taxes, and
other payroll deductions)
 Output. (producing reports and displays about sales
performance)
 Storage. (maintaining records on customers,
employees, and products)
 Control. (generatingIr. Muhril
audible signals to indicate proper48
Ardiansyah, M.Sc., Ph.D.
Recognizing Information Systems
As a business professional, You should be able
to recognize the fundamental components of
information systems You encounter.

You should be able to identify:

** The people, hardware, software, data, and network
resources they use.
** The types of information products they produce.
** The way thy perform input, processing, output,
storage, and control activities.

Ir. Muhril Ardiansyah, M.Sc., Ph.D. 49