Chapter I

Information Systems: Challenges and Opportunities

The Competitive Business Environment

1. Emergence of the Global Economy
2. Transformation of Industrial Economics
3. Transformation of the Business Enterprise

Information System can defined technically as a set of interrelated components that collect (or
retrieved), process, store, and distribute information to support decision making and control in an
organization.
Information – data have been shaped into a form that a meaningful and useful to human being.
Data – streams of raw facts representing events occurring in organizations or the physical environment
before they have been organized or arranged into a form that people can understand and used.

Three activities in an information system

1. Input – captures or collect raw data from within the organization or from its external
environment.
2. Processing – converts raw input into a more meaningful form.
3. Output – transfers the processed information to the people or activities where it will be used.

Feedback – output that is returned to appropriate members of the organization to help them evaluate
or correct the input stage.
Formal system rests on accepted and fixed definitions of data and procedures for collecting, storing,
processing, disseminating, and using these data.
Informal information system relies on implicit agreements and unstated rules of behavior.
Formal information system can be either computer based or manual.

A Business perspective on Information System

An information system is an organizational and management solution, based on information
technology, to a challenge posed by the environment.

Key elements of an organization:

1. People
2. Structure
3. Operating procedures
4. Politics
5. Culture

Standard operating procedures (SOP’s) are formal rules for accomplishing tasks that have been
developed over a long time.

Organization’s skill and people

1. Knowledge workers – design products or services and create new knowledge
2. Data workers – process the organization’s paperwork
3. Production or Service workers – produces the products or services of the organization
Different level of Organization
1. Senior managers – make long –range strategic decisions about products and services to produce
2. Middle managers- carry out the programs and plans of senior management
3. Operational managers – responsible for monitoring the firm’s daily activities

Computer hardware – physical equipment used for input, processing, and output activities in an
information system.
Computer software – detailed preprogrammed instructions that control and coordinate the computer
hardware components in an information system.
Storage technology – physical media for storing data.
Communications technology – both physical devices and software, links the various pieces of hardware
and transfers data from one physical location to another.
Network – links two or more computers to share data or resources.

Contemporary Approaches to Information Systems

1. Technical Approach – emphasizes mathematically based, normative models to study
information system, as well as the physical technology and formal capabilities of these systems.
2. Behavioral Approach – concerned with behavioral problems and issues.

The Widening Scope of Information Systems

There is a growing interdependence between business strategy, rules, and procedures on the
one hand, and information systems software, hardware, data-bases, and telecommunications on the
other. A change in any of these components often requires changes in other components.

Internet is an international network of networks that are both commercial and publicly owned.
World Wide Web is a system with universally accepted standards for storing, retrieving, formatting, and
displaying information in a networked environment.
Web site is the web pages created by an organization or individual.
 Chapter II
The Strategic Role of Information Systems

Management Challenges
1. Sustainability of competitive advantage – the competitive advantages conferred by information
technology do not necessarily last long enough to ensure long term profits.
2. Organizational barriers to strategic transitions – requires far-reaching sociotechnical changes.

Kinds of Systems
1. Operational level system – support operational managers by keeping track of the elementary
activities and transactions of the organization
2. Knowledge level system – support knowledge and data workers in an organization.
3. Management level system – designed to serve the monitoring, controlling, decision-making,
and administrative activities of the middle managers.
4. Strategic level system – help senior management tackle and address strategic issues and long-
term trends, both in the firm and external environment.

KINDS OF GROUPS
INFORMATION SYSTEM SERVED

Strategic Senior
Level Mangers

Management Middle
Level Managers

Knowledge Knowledge and

Level Data Workers

Operational Operational
Level Managers

Sales and Manufacturing Finance Accounting Human Resources

Marketing
 Major Types of Systems
1. Transaction processing systems (TPS) – basic business systems that serve the operational level
of the organization.
2. Knowledge work systems (KWO) and Office automation systems (OAS) – serve the information
needs at the knowledge level of the organization.
3. Management information systems (MIS) – serve the management level of the organization,
providing managers with reports and, in some cases, with on-line access to the organization’s
current performance and historical records.
4. Decision support systems (DSS) – serve the management level of the organization to make
decisions that are semi-structured, unique, or rapidly changing, and not easily specified in
advance.
5. Executive support systems (ESS) – serve the strategic level of the organization in addressing
unstructured decisions and create generalized computing and communications environment.

TYPES OF SYSTEMS Strategic Level Systems

Executive 5-year 5-year 5-year Proft Manpower
Support Systems (ESS) sales trend operating budget planning planning
forcasting plan forcasting

Management Level Systems

Management Sales Inventory Annual Capital Relocation
Information Systems (MIS) management control budgeting Investment analysis analysis

Decision Sales Region Production Cost Pricing/profitablity Contract cost

Support Systems (DSS) analysis scheduling analysis analysis analysis

Knowledge Level Systems

Knowledge Engineering Graphics Managerial
Work Systems (KWS) workstations workstations workstations

Office Word Image Electronics

Automation Systems (AOS) processing storage calendars

Operational Level Systems

Transactional Machine control Securities trading Payroll Compensation
Processing Systems (TPS) Order tracking Plant scheduling Accounts payable Training & development
Order processing Material movement Cash management Accounts receivable Employee record keeping
control
Sales and Manufacturing Finance Accounting Human Resources
Marketing

Strategic information system changes the goals, business processes, products, services, or
environmental relationships of organizations to help them gain an edge over competitors.
Value chain model highlight specific activities in the business where competitive strategies can be best
applied.
Primary activities are most directly related to the production and distribution of the firm’s products and
services that create value for the customer.
Support activities make the delivery of the primary activities possible and consist of organization
infrastructure.
Supply chain management integrates the supplier, distributor, and customer logistics requirements into
one cohesive process.
Supply chain in a collection of physical entities which are linked through processes to supply goods or
services from source through consumption.