Chapter 1 (Information System in Global Business Today)

Information Technology (IT): Information Technology consists of all hardware and

software that a firm needs to use in order to achieve its business objectives.
Management: Management is the process that includes strategic planning, setting;
objectives, managing resources, deploying the human and financial assets needed to
achieve objectives, and measuring results. Management also includes recording and
storing facts and information for later use or for others within the organization.
Information System: An information system can be defined technically as a set of
interrelated components that collect (or retrieve), process, store and distribute
information to support decision making and control in an organization.
An Information System can be any organized combination of:
- People,
- Hardware,
- Software,
- Communications Networks,
- Policies or Data resources.
Example of Information Systems:
▪ Smoke signals for communication
▪ Card catalog in a library
▪ The cash register
Information Systems from both technical and business perspective:
From a technical perspective, an information system collects, stores, and
disseminates information from an organization's environment and internal operations
to support organizational functions and decision making, communication,
coordination, control, analysis, and visualization.
From a business perspective, an information system provides a solution to a problem
or challenge facing a firm and provides real economic value to the business.
Data V/s Information:
• Data is a collection of facts, such as values or measurements.
• It can be numbers, words, measurements, observations, or even just descriptions
of things.
• Data are raw facts about physical phenomena or business transactions
 • Example: 1. Sales data is names, quantities, and dollar amounts.
2. Product descriptions, Customer records, Employee files, Inventory
database.
• Information is data that has been converted into meaningful and useful context
for end users.
• Information is processed data which is organized and presented at a time and
place so that the decision maker may take necessary action.
• Sales information is amount of sales by product type, sales territory, or
salesperson.

1.2 Functions of an Information System:

A system (sometimes called a dynamic system) has three basic interacting components
or functions. These include: input, processing, and output.
1. Input: Involves capturing or collecting raw data from within the organization or
from its external environment. Example: raw materials, energy, data
2. Processing: Involves converting this raw input into a meaningful form. Example:
manufacturing process.
3. Output: Involves transferring the processed information to the people who will use
it or to the activities for which it will be used. Example: finished products, human
services.
Feedback and Control
Two additional components of the system concept include feedback and control. A
system with feedback and control components is sometimes called a cybernetic
system, that is, a self-monitoring, self-regulating system.
• Feedback is data or output about the performance of a system.
• Control involves monitoring and evaluating feedback to determine whether a
system is moving toward the achievement of its goals. The control function
ensure that it produces proper output to make necessary adjustments to a
system’s input and processing.
1.3 Strategic Business Objectives of Information Systems
Although many managers are familiar with the reasons why managing their typical
resources such as equipment and people are important, it is worthwhile to take a
moment to examine the growing interdependence between a firm’s ability to use
information technology and its ability to implement corporate strategies and achieve
corporate goals. Specifically, business firms invest heavily in information to achieve
six strategic business objectives:
1. Operational excellence
2. New products, services, and business models
3. Customer and supplier intimacy
4. Improved decision making
5. Competitive advantage
6. Survival
1. Operational Excellence: Businesses continuously seek to improve the efficiency of
their operations in order to achieve higher profitability. Information systems and
technologies are some of the most important tools available to managers for achieving
higher levels of efficiency and productivity in business operations, especially when
coupled with changes in business practices and management behavior.
2. New Products, Services, and Business Models: Information systems and
technologies are a major enabling tool for firms to create new products and services,
as well as entirely new business models. A business model describes how a company
produces, delivers, and sells a product or service to create wealth.
3. Customer and Supplier Intimacy: When a business really knows its customers,
and serves them well, the way they want to be served, the customers generally respond
by returning and purchasing more. The result is increased revenues and profits.
Likewise with suppliers: the more a business engages its suppliers, the better the
suppliers can provide vital inputs. The result is a lower cost of doing business.
4. Improved Decision Making: Information systems and technologies have made it
possible for managers to use real-time data from the marketplace when making
decisions. Previously, managers did not have access to accurate and current data and
as such relied on forecasts, best guesses, and luck. The inability to make informed
decision resulted in increasing costs and losing customers.
5. Competitive Advantage: Doing things better than your competitors, charging less
for superior products, and responding to customers and suppliers in real time all add
up to higher sales and higher profits that your competitors cannot match.
6. Survival: Firms also invest in information systems and technologies because they
are necessities of doing business. Information systems are not a luxury. In most
businesses, information systems and technology are the core to survival.
1.4 Dimensions of Information Systems:
Three Important dimensions of information system are, Organization, Management,
technology.
1. Organization: Information system is the integral part of the organization. The key
elements of organization are its people, structure, business process, politics, and
culture. Organizations are composed of different levels and specialties in terms of
levels and functions.
The organization dimension of information systems involves issues such as the
organization’s hierarchy, functional specialties, business processes, culture, and
political interest groups.
2. Management: Management is responsible to take a sense out of many situations
faced by organizations, make decisions and formulate action plans to solve the
problems. It rests to the managerial level people. It is important to know the
managerial roles and decisions vary at different levels of the organization such as
senior, middle, operational and junior manager.
The management dimension of information systems involves issues such as
leadership, strategy, and management behavior.
3. Technology: IT is one of the tools to cope up with the change. Computer hardware
is the physical equipment used for input, processing and output activities in system.
Computer software consists of detailed preprogrammed instructions that control and
coordinate the hardware components. Storage technology includes both the physical
media for storing data in magnetic disk, optical disk, tape etc.
The technology dimension consists of computer hardware, software, data management
technology, and networking/telecommunications technology.

1.5 Contemporary approaches to information systems:

Multiple perspectives on information systems show that the information systems are
the sociotechnical systems. It can be divided into two approaches:
1. Technical approach: This emphasizes mathematically based models to study
information systems as well as the physical technology and formal capabilities of
these systems. Computer science is concerned with establishing methods of
computation, storage and access. Management science emphasizes on development of
models for decision making and management practices.
2. Behavioral approach: It is concerned with the issues like strategic business
integration, design, implementation, utilization and management. It majorly focuses on
the cognitive style of an individual. It also focuses on technical solutions, changes in
attitudes, management and organizational policies.
1.6 How Information Systems are Transforming Business
Technology, to a large extent, has driven organizations to change the way they operate
and that includes the way they manage. We’re going to take an in-depth look at how
organizations work and how they’ve been transformed by technology on the world
stage.
Information systems are the foundation for conducting business today. In many
industries, survival and even existence is difficult without extensive use of information
technology. No longer can we imagine going to work and conducting business without
them. As a society we have come to rely extensively on the use of information
appliances such as cell phones, BlackBerrys, handhelds, and other hardware.
Communicating and conducting business is increasingly being carried out through the
use of e-mail, online conferencing, and international teleconferencing. Internet
technologies have become essential business tools.
1.7 The Emerging Digital Firm
A digital firm is one in which nearly all of the organization’s significant business
relationships with customers, suppliers, and employees are digitally enabled, and key
corporate assets are managed through digital means.
When a firm goes digital, it’s not about just adding a computer system to the mix.
Throwing a computer system at outdated business processes is exactly the wrong thing
to do. A truly digital firm has several characteristics that distinguish it from most of
the firms claiming to be digitized:
• Significant business relationships with customers, suppliers, and employees are
digitally enabled and mediated.
• Core business processes are accomplished through digital networks and span the
entire organization or link multiple organizations.
• Key corporate assets — intellectual property, core competencies, and financial
and human assets — are managed through digital means.
• Internal and external environments are quickly recognized and dealt with.
And the number one reason digital firms experience greater opportunities for success
and profits is because they view information technology as the core of the business
and a primary management tool.
 Chapter 2 (Global E-Business and Collaboration)
2.1 Information System Resources:

Figure Resources of Information System.

Information system consists of five major resources:
1. People resources
2. Hardware resources
3. Software resources
4. Data resources
5. Network resources
1. People Resources: People are required for the operation of all information systems.
These people resources include end users and IS specialists.
-IS Specialist (system analysts, software developers, system operators).
-End users (anyone else who uses information systems).
2. Hardware Resources: The concept of Hardware resources includes all physical
devices and materials used in information processing.
- Machines (computers, video monitor, magnetic disk drives, printers, optical
scanners).
- Media (floppy disks, magnetic tape, optical disks, plastic cards, paper forms).
3. Software Resources: The concept of Software Resources includes all sets of
information processing instructions. This generic concept of software includes not
only the sets of operating instructions called programs, which direct and control
computer hardware, but also the sets of information processing instructions needed by
people, called procedures.
- Programs (operating system program, spreadsheet programs, and word processing
programs).
- Procedures (data entry procedures, error correction procedures).
4. Data Resources: Data is more than the raw material of information systems. The
concept of data resources has been broadened by managers and information systems
professionals.
- Database (product description, customer records, employee files, inventory
databases).
5. Network Resources: Telecommunications networks like the Internet, intranets, and
extranets have become essential to the successful operations of all types of
organizations and their computer-based information systems. Network resources
emphasizes that communications networks are a fundamental resource component of
all information systems.
- Communications media (twisted-pair wire, coaxial cable, fiber-optic cable, and
wireless systems.)
- Network support (people, hardware, software.)
Information Systems Literacy V/s Computer Literacy
▪ Information Systems literacy is a broad-based understanding of information
systems. It includes a behavioral as well as a technical approach to studying
information systems.
▪ In Contrast, Computer literacy focuses primarily on knowledge of information
technology. It is limited to understanding how computer hardware and software
works.

2.2 Types of Information Systems:

▪ Operations Support Systems: Information systems are needed to process data
generated by and used in business operations. The role of a business firm’s
operations support systems is to:
• Effectively process business transactions
• Control industrial processes
• Support enterprise communications and collaboration
• Update corporate databases

➢ Transaction Processing Systems (TPS): The transaction processing

system automates the transaction collection, modification, and retrieval
process. Example: sales processing, inventory systems, accounting
systems. TPS process transactions in two basic ways:
• Batch Processing- transactions data is accumulated over a period of
time and processed periodically. Example: a bank processes all
checks received in a batch at night.
• Online Processing-data is processed immediately after a transaction
occurs. Example: a bank processes an ATM withdrawal immediately.
➢ Process Control Systems: In a manufacturing organization, certain
decisions are made by a computer system without any manual intervention.
Example: using sensors to monitor chemical processes in a petroleum
refinery
➢ Enterprise Collaboration Systems: In recent times, there is more stress
on team effort or collaboration across different functional teams. A system
which enables collaborative effort by improving communication and
sharing of data is referred to as an enterprise collaboration system.
Example: email, video conferencing.
▪ Management Support Systems: It focus on providing information and support for
effective decision making by managers. They support the decision-making needs of
strategic (top) management, tactical (middle) management, and operating
(supervisory) management. Conceptually, several major types of information
systems support a variety of decision-making responsibilities:
• Management Information Systems (MIS)
• Decision Support Systems (DSS)
• Executive Support Systems (ESS
➢ Management information systems: The management information system
provides aid to managers by automating different processes that were
initially done manually. Business activities like business performance
 tracking and analysis, making business decisions, making a business plan,
and defining workflow. It also provides feedback to the managers by
analyzing the roles and responsibilities. Example: Daily sales analysis
reports.
➢ Decision Support Systems: A decision support system is an information
system that analyses business data and other information related to the
enterprise to offer automation in decision-making or problem-solving.
Example: Product pricing, profitability forecasting, risk analysis
➢ Executive Support Systems: An Executive Support System Provide top
and middle management with immediate and easy access to selective
information about key factors that are critical to accomplishing a firm’s
strategic objectives. Example: easy access to actions of competitors.

2.2 A Payroll TPS

A payroll system keeps track of money paid to employees. An employee time sheet
with the employee's name, social security number, and number of hours worked per
week represents a single transaction for this system.
A TPS for payroll processing captures employee payment transaction data (such as a
time card). System outputs include online and hard-copy reports for management and
employee paychecks.

Q. Objectives of Management Information System:

The following are the objectives of a management information system:
1. MIS is very useful for efficient and effective planning and control functions of the
management. Management is the art of getting things done through others. MIS will
be instrumental in getting the things done by providing quick and timely information
to the management.
2. Reports give an idea about the performance of men, materials, machinery, money
and management. Reports throw light on the utilization of resources employed in the
organization.
3. MIS is helpful in controlling costs by giving information about idle time, labour
turnover, wastages and losses and surplus capacity.
4. By making comparison of actual performance with the standard and budgeted
performance, variances are brought to the notice of the management by MIS which
can be corrected by taking remedial steps.
5. MIS brings to the notice of the management strength (i.e., strong points) of the
organization, to take advantage of the opportunities available.
6. MIS reports on production statistics regarding rejection, defective and spoilage and
their effect on costs and quality of the products.

2.3 Information Systems Function in Business:

At each level of Organization, Information Systems support the major Functional areas
of the Business
➢ Sales and Marketing Systems
• Help the firm identify Customers for firm’s Products or Services,
• Develop Products and Services to meet Customer's needs
• Promote the Products and Services
• Sell the Product and Services
• Provide ongoing Customer support
➢ Manufacturing and Production Systems
• Deals with Production Planning
• Development
• Production of Products and Services
• Control the flow of Production
➢ Finance and Accounting Systems
• Track the organizations firm’s financial assets and fund flows
• Budgeting and profit planning
➢ Human Resources Systems
➢ Maintain Employee records
➢ Track Employee skills, Job performance, and Training
➢ Support planning for Employee compensation and career development
➢ Human resources planning