REVIEWER IN ITAB 2100

Information Systems
 In Business, people and organization seek information specifically for the purpose of sound
decision making and problem solving – two closely related practices that form foundation
of every successful company.
Data vs. Information
 Do not mean the same thing. Data are the raw materials in the production of Information.
Characteristics of Useful Information
 Relevant – Information must pertain to the problem at hand.
 Complete – Partial information is often worse than no information.
 Accurate – Erroneous information may lead to disastrous decisions.
 Current – Must be based on the latest information available.
 Economical – The cost of obtaining information.
What is a System?
A system is an array of components that works together to achieve a common goal, or multiple
goals.
Systems and Subsystems
A system consists of subsystems – components of a larger system – with sub-goals, all contributing
to meeting the main goal. Subsystems can receive input from, and transfer output to, other systems
or subsystems.
System are closed or open, depending upon the nature of information that flows within an
organization. Closed systems are stand-alone, with no connection to another system: nothing
flows in from another system: nothing flows out to another system Open system interfaces and
interacts with other systems.
Benefits of Human-Computer Synergy
The combination of strengths of machines with humans creates synergy.
Human-computer combinations allow the results of human thoughts to be translated into efficient
processing of large amounts of data.
Information Technology
A term that refers to all technologies that collectively facilitate construction and maintenance of
information system.
Components of Information System
 Data – Input to produce Information
  Hardware – A computer and its peripheral equipment.
 Software – Set of instructions on how to take in, process, display and to store data and
information

 Telecommunication – hardware and software that facilitates transmission in the form of

electronic data
 People – IS Professionals and users.
 Procedures – Rules to achieve optimal and secure operations in data processing
Four Stages of Processing
 Input- The first step in producing information is collecting and introducing data into the
IS, known as input. Most data an organization uses as input are generated and collected
within the organization.
 Process- The computer’s speed and accuracy let organizations process millions of pieces
of data in several seconds; in the past, such quantities of data could not have been processed
quickly enough to be meaningful.
 Output- Output is the information an IS produces and displays in the format most useful
to an organization.
 Storage- One of the greatest benefits of using computers is their ability to store a vast
amounts of data and information. (Internal and External)
Different types of IS
 Transaction Processing Systems- TPSs predominant function is to record data collected
at the boundaries of organizations, in other words, at the point where the organization
transacts business with other parties. (ATM, POS, etc..)
 Management Information Systems- Information System for planning, control, decision-
making, and problem solving.
 On-demand Output- Reports or the output part of MIS.
 Group Decision Support Systems (GDSS/DSS)- It takes the optimal course of actions,
gather detailed data and information to help middle/senior managers make decisions.
 Executive Information Systems/Executive Support System (EIS/ESS)- To help high
ranking officers/executives direct an organization to focus on long range strategic plan.
 Expert Systems- Incorporation of human expertise to a computer system that emulates our
decision-making. - AI
 Geographic Information System- A database that contains data about part of a city, a
country, a state, or even the entire world. (Google Maps, Waze, and other uses especially
for agriculture)
Information Systems in Functional Business Areas
 Accounting- In accounting, information systems help record business transactions,
produce periodic financial statements, and create reports required by law, such as balance
 sheets and profit-and-loss statements. They also help create reports that may not be required
by law but help managers understand changes in an organization’s finances. Accounting
ISs contain controls to ascertain adherence to standards, such as double entry.
 Finance- While accounting systems focus on recording and reporting financial changes
and states, the purpose of financial systems is to facilitate financial planning and business
transactions. In finance, information systems help organize budgets, manage cash flow,
analyze investments, and make decisions that could reduce interest payments and increase
revenues from financial transactions.
 Marketing- Marketing’s purpose is to pinpoint the people what they’re most likely to
purchase of what the organization sells and to promote the appropriate products and
services to those people. The system identifies trends in the demand for the company’s
products and services
 Human Resources- Human resource management systems help mainly in record keeping
and employee evaluation. Every organization must maintain accurate employee records.
Human resource management systems maintain such records, including employees’
pictures, employee status and tax information, and other data that other systems such as
payroll may use.
Other Information Systems in Different Business Sectors
 Manufacturing
 Service
 New Business
 Government
E-Commerce
The intersection of IT and business is electronic commerce. In the early years, e-commerce is
restricted only to business-to-business activities because of the large distances operation and
causes a lot of money in using private/third party networks. The Internet spawned huge surge in
business-to-business and business-to-customer electronic trade, now every individual and small
businesses can afford to use a network for business. The Internet is a vast network of computers
connected across the globe that can share both information and processing. The Web is capable of
displaying text but also graphics, sounds, and moving images. The Web has enticed thousands of
businesses to become involved in commercial, social, and education initiatives.

STRATEGIC USES OF INFORMATION SYSTEMS

Strategy – Strategic Advantage. Plan to gain an advantage over enemy. A business strategy is a
plan to outperform competitors. By creating new opportunities. Using strategy to maximize its
strengths, resulting in a competitive advantage.
Why Strategic IT
Strategic Uses of Information Systems. Technology is no longer an afterthought in forming
business strategy, but the actual cause and driver. IT can change the way businesses compete.
Strategic View of IS
Information systems are vital in competitive network. Information systems are a means of
organization renewal. IS are necessary investment in technologies that help a company adopt
strategies and business processes that can reinvent itself in order to survive and succeed in today’s
dynamic business environment.
Achieving Competitive Advantage
 Initiative #1: Reduce Cost- Reduce costs to lower price. Using of Web to automate
customer service.
 Initiative #2: Raise Barriers to Entrants. Less competition is better. Obtain copyrights
and patents on invention, techniques and services.
 Initiative #3: Establish High Switching Costs. Explicit – Charge customer for switching
(early termination of contract) Implicit – Indirect costs over period of time, such as
implementation of new product that does the same job as the old.
 Initiative #4: Create New Products and Services. Having unique product or services
First mover – organization that is first to offer a new product or service.
 Initiative #5: Differentiate Products and Services. Persuading customers that your
product is better than competitors’. Advertising. Develop new IT features to differentiate
product/service
 Initiative #6: Enhance Products or Services. Enhance existing products or services to
increase value to customer.
 Initiative #7: Establish Alliances. Strategic Uses of Information Systems. Two or more
organization combining services.
 Initiative #8: Lock in Suppliers or Buyers. Organizations can achieve competitive
advantage if they are powerful enough to lock either suppliers into their mode of operation
or buyers to their product. Accomplished by bargaining power
Competitive Weapon
The intention is to improve mundane operations using IT yielded a system with strategic qualities.
SIS embodies two types of ideas: Potentially-winning business move. How to harness IT to
implement that move
SIS conditions. Must be serving an organizational goal. The unit must be working with the
managers of the other functional units.
Creating an SIS
Top management must be involved from initial consideration through development and
implementation
SIS must be a part of the overall organizational strategic plan
Steps involved is SIS planning
1. Presents potential strategic moves
2. Brainstorm different strategic moves
3. Select the most attractive one
4. Brainstorm ways to support the selected move with IT
5. Evaluate the feasibility of an SIS to support the move
6. List the general functions the SIS will fulfill
7. List the major feature of the SIS
Reengineering and Organizational Change
To implement an SIS and achieve a competitive advantage, organization must rethink the entire
way in which it operates. Goal of re-engineering is to achieve efficiency leaps of 100 percent or
even higher.
Competitive Advantage as Moving Target
SISs developed as strategic advantages quickly became standard business. Banking industry
(ATMs and banking by phone).
Companies must continuously contemplate new ways of utilizing information technology to their
advantage. Airlines’ reservation system
Success and Failure on the Web
Just being first on the Web is not enough to be successful; business ideas must be sound. An
organization must carefully define what buyers want. Establishing a recognizable brand name is
important but does not guarantee success; satisfying needs is more important.
The Bleeding Edge
Business owners must develop new features to keep the system on the leading edge. Adopting a
new technology involves great risk. No experience from which to learn No guarantee technology
will work or customers and employees will welcome it
LESSON 3: EFFECTIVENESS AND EFFICIENCY OF IS
EFFECTIVENESS- defines the degree to which a goal is achieved. Thus, a system is more or
less effective depending upon:
1) how much of its goal it achieves and;
2) the degree to which it achieves better outcomes than other systems do.
EFFICIENCY- is determined by the relationship between resources expended and the benefits
gained in achieving a goal.
Information Technology
ACCOUNTING-The purpose of accounting is to track every financial transaction within a
company, from dollar to multimillion dollar purchases, from salaries to benefits, to sales of every
item.
FINANCE- A firm’s health is often measured by its finances, and ISs can significantly improve
financial management. The goal of financial managers, including controllers and treasurers, is to
manage an organization’s money as efficiently as possible. Collecting payables as soon as possible.
Making payments at the latest time allowed by contract or law ensuring that sufficient funds are
available for day-to-day operations taking advantage of opportunities to accrue the highest yield
on funds not used for current activities
 Cash Management- Systems that deal specifically with cash are often called cash
management systems (CMSs). One common use for a CMS is to execute cash transactions
in which financial institutions transfer huge amounts of money using electronic funds
transfer (EFT). EFT is the electronic transfer of cash from an account in one bank to an
account in another bank
 Investment Analysis- Every investor's goal is to buy an asset and later sell it for more than
it cost. When investing in securities, such as stocks and bonds, it is important to know the
prices of securities in real time, that is, “right now”.
ENGINEERING- IT’s greatest contribution to engineering is in the area of computer-aided design
(CAD) and rapid prototyping (creating one-of-a-kind products to test design in three dimensions).
MANUFACTURING AND INVENTORY CONTROL
 Materials Requirement Planning (MRP)- Economic Order Quantity (EOQ) of specific
raw materials is the optimal quantity that allows business to minimize overstocking and
save cost.
 Manufacturing Execution Systems
 Manufacturing Resources Planning (MRP II)- MRP II systems can quickly modify
schedules to accommodate orders. The most important input of MRP II systems is the
master production schedule (MPS), which specifies how production capacity will be used
to meet customer demands & maintain inventories.
MARKETING AND SALES-
 Market Research system help to find the population and regions that are most likely to
purchase a new product or service.
 They also help analyze how a new product fares in its first several months on the market.
The principle of targeted marketing is to define the prospective customer as accurately as
possible and then to direct promotional content only to those people most likely to purchase
your product.
 Computer telephony integration (CTI) is a technique allowing computer to use the digital
signal coming through a telephone line as input in a computer system. It has been used
often in marketing, sales, and customer service.
  The Computer as Marketing and Selling Medium. For several decades, radio and television
were marketing’s only non-print media. Now, the household computer has become a means
of promoting products.
 Sales Force Automation can increase sales productivity significantly, making sales
presentations more efficient.
 To better serve customer and learn of their changing needs, companies use customer
relationship management (CRM).
HUMAN RESOURCES- HR Management has become more complex due to the fast growth in
specialized occupations, the need to train and promote highly skilled employees, and the growing
variety of benefits programs.
HR management can be classified into five activities:
 Employee Record Management
 Promotion and Recruitment
 Training
 Evaluation
 Compensation and Benefits Management
ENTERPRISE RESOURCE PLANNING- Many corporations have opted to replace their
disparate ISs with a single integrated systems. Rather than using an IS, or several ISs, in each
business function, all business functions are served by one system that supports different activities
for different departments. Such systems are often called enterprise resource planning (ERP)
systems. Although these systems do help in planning, their main focus is to help run the different
functions, therefore, their more accurate name is enterprise applications, but ERP is their more
popular name.
GROUPWARE AND COLLABORATIVE WORK- When people work together, either to
provide a service or create a product, they often do so in sequence: one person provides his or her
input to the project, then passes it along to other person, who does the same, and so on along the
chain. A series of such repeated activities is called work cycle , or simply cycle. Work cycles may
take a long time to complete.
Document Control- Quality Manager document control module allows companies to automate
and manage internal and external document.
Collaborative Projects- Managing a project– especially a large one involving many
organizational units– and keeping on track requires enormous effort.
Brainstorming- In business, brainstorming refers to the process of a group of colleagues meeting
and working collaboratively to generate creative solution and new ideas.