What is an Information System?

1. What is an Information System? An information system contains information about an organization and its surrounding environment Environment Suppliers Customers Organization Information System Input Processing Output Feedback The important activities - input, processing, and output. Feedback is output returned to appropriate people or activities in the organization to evaluate and refine the input.

2. Information Systems • IS is a collection of interrelated components that • - collect (retrieve), process, store, and distribute information to support decision making and control in an organization. • - also help managers and workers analyze problems, visualize complex subjects, and create new products. • Three major activities: input, processing, output. • Input => collects raw data from the organization/ external environment. • Processing => converts this raw input into meaningful form. • Output => transfer the processed information to the people/activities. • Feedback => output that is returned to appropriate members of the organization to help them evaluate/correct the input stage.

3. Why Information Systems ? • Earlier information itself was not considered an important asset for the firm. • The management process was considered a face-to-face, personal art, not a global coordination process. • However, today’s managers have to understand information systems because most organizations need information systems to survive and prosper. • Three worldwide changes have altered the environment of business. • 1. The emergence and strengthening of global economy • 2. The transformation of industrial economies and societies into knowledge- and information-based service economies. • 3. The transformation of the business enterprise

4. Why Information Systems ? • 1. The emergence and strengthening of global economy • A growing percentage of American economy- and other advanced industrial economies in Europe and Asia - depends on imports and exports. • The success of a firm today depends on its ability to operate globally. • Because of global communication and management systems, customers now can • - shop in a worldwide marketplace. • - obtain price and quality information reliably, 24 hours a day. • - compare quality and price all over the world market.

5. Why Information Systems ? • 2. The transformation of industrial economies and societies into knowledge- and information-based service economies. • From the growth curve of the information economy it is clear that - the United States has experienced a steady decline in the number of farm workers and blue-collar workers who are employed in factories. • - However, the country is experiencing a rise in the number of white-collar workers who produce economic value using knowledge and information.

6. Why Information Systems ? • 3. The transformation of the business enterprise: • The traditional business firm was a • - hierarchical and centralized. structured arrangement of specialists. • - Specialists relies on a fixed set of standard operating procedures to deliver product. • - Traditional manager relies on formal plans, a rigid division of labor, formal rules • The new business firm is • - less hierarchical, decentralized, flexible arrangement of generalists . • - New manager relies on informal commitments and networks to establish goals rather than formal planning.

7. Computer-based Information System • Formal System • based on accepted and fixed definitions of data and procedures (operating with predefined rules). • Formal system • Manual IS => use paper and pencil technology. • Computer-bases IS => An information system that is based on computer hardware and software technology for processing and disseminating information. Computer-based manual

8. Information System: Organization, Management &Technology If you want to use the information system effectively, you need to understand the organization, management, and information technology of the system. Technology Organizations Information Systems Management

9. Organization • The key elements of an organization are its people, structure, operating procedures, politics, and culture. • An organization coordinates work through a structured hierarchy and formal, standard operating procedures. • The hierarchy arranges people in a pyramidal structure of rising authority and responsibility. • The upper levels of hierarchy consist of managerial, professional, and technical employees. • The lower levels consist of operational personnel. • Standard operating procedures (SOPs) are formal rules to guide employees in different procedures.

10. Organization • Organization needs different types of workers: knowledge workers, data worker, and production or service workers, etc. • Knowledge workers => design products or services and create new knowledge (e.g. engineers, architects, or scientists). • Data workers => process the organization’s paperwork (e.g. secretaries, bookkeepers, or clerk) • Production or service workers => produce the products and services of the organization

11. Major Organizational Functions Function Purpose Sales and Selling the organization's products and marketing services Manufacturing Producing products and services Finance Managing financial assets (cash, stocks, bonds, etc) Accounting Maintaining financial records (receipts, disbursements, paychecks, etc Human Attracting and maintaining labor force; resources maintain employee record

12. Culture and Politics • Each organization has a unique culture, or fundamental sets of assumptions, values, and ways of doing things. • Parts of an organization’s culture can always be found embedded in its information systems. • Different levels and specialties in an organization create different interests and points of view. • These views often conflict. • Conflict is the basis for organizational politics.

13. Management • Managers set the organizational strategy for responding and they allocate the human and financial resources to coordinate the work. • They must have leadership quality. • They must also create new products and services and even re-create the organization from time to time using information technology. • Senior managers => They make long-term decisions about products and services to produce. • Middle managers=> They carry out the programs and plans of senior management. • Operational Manager => They are responsible for monitoring the firm’s daily activities.

14. Technology • Information technology is one of many tools available to managers for solving problems. • Computer hardware => Physical equipment used for input, processing, and output activities in an information system. • Computer software => Sets of instructions that control and coordinate the work of computer hardware components in an information system. • Storage technology => Consists of physical media and software governing the storage and organization of data for use in an information system. • Communication technology => Consists of physical devices and software that link various computer hardware components and transfer data from one physical location to another.

15. Different Approaches to Information Systems • Multiple perspectives on information systems show that the study of information systems is a multidisciplinary field. • No single theory or perspective dominates. • The fig. shows the major disciplines that contribute problems, issues, and solutions in an information system. • Information systems are sociotechnical systems. • They are composed of machines, devices, and physical technology. • However, they require substantial social, organizational, and intellectual investments to make them properly.

16. Different Approaches to Information Systems Technical Approaches Computer Science Operation Research Management Science MIS Sociology Psychology Economics Behavioral Approaches

17. Technical Approach • This approach is base on mathematical models to study information systems. • The disciplines that contribute to this approach are computer science, management science, and operations research. • Computer science can be useful to establish theories of computability, methods of computation, and methods of efficient data storage and access. • Management science is useful to develop the models for decision making and management practices. • Operations research concentrates on mathematical techniques for optimizing selected parameters of organizations (e.g. transportation, inventory control, and transaction costs).

18. Behavioral Approach • Issues such as strategic business integration, design, implementation, utilization, and management cannot be explored usefully with the models used in technical approach. • Other behavioral disciplines contribute important concepts and methods. • Sociologists will focus on how groups and organizations shape the development of systems and also how systems affect individuals, groups, and organizations. • Psychologists will concentrate on how formal information is perceived and used by human decision makers. • Economists will be interested in what impact systems have on control and cost structures within the firm and within the markets. • This approach does not ignore technology.

19. Sociotechnical Systems • It combines the theoretical work of computer science, management science, and operation research and behavioral issues raised by sociology, economics, and psychology. • No single approach can solve all problems. • Problem with systems and their solutions are rarely all technical or all behavioral. • We need to understand the perspectives of all disciplines. • In a sociotechnical system, the performance of a system is optimized when both technology and the organization mutually adjust to one another until a satisfactory fit is obtained.

20. The Interdependence between Organization & Information Systems Hardware Interdependence Business Strategy Rules Procedures Software Database Tele- Comm. Organization Information System

21. Info. System Info. System Info. System Institutional Core Activities Managerial Control Technical Changes 1960s - 1970s 1980s- 1990s 1950s The Scope of Information Systems

22. The Internet

23. New Options for Organizational Design: The Networked Enterprise 1) Flattening Organization. 2) Separating Work from Location 3) Reorganizing Work Flows 4) Increasing Flexibility of Organizations 5) Changing management Process 6) Redefining Organizational Boundaries

24. Flattening Organizations A Traditional Hierarchical Organization with many levels of management An Organization that has been flattened by removing layers of management

25. Separating Work from Location:Virtual Organization Manufacturing Company Design Company Sales & Marketing Company Core Company Logistics Company Finance Company

26. 1 2 3 4 5 6 7 8 9 10 11 1 2 3 4 5 6 11 clerical steps 6 professional steps Reorganizing Work Flows Paper system insurance application = 33 days + Imaging system insurance application: New streamlined workflow + 1 2 3 4 = 5 days 1 2 3 4 professional steps 3 clerical steps

27. Increasing Flexibility of Organizations Small Companies: 1) Desktop machines, inexpensive computer-aided design (CAD) software, computer-controlled machine tools provide the precision, speed, and quality of giant manufacturers. 2) Manager can easily obtain the information from widely scattered locations. 3) Information can be accessed by telephone. Large Companies: 1) Customer purchasing records (database) can be analyzed to determine the customer’s needs. 2) Information can be easily distributed down the organization to solve problems.

28. Electronic Commerce and Electronic Business • www.varsitybooks.com => Buy books on line • www.amazon.com => Buy books on line • www.travelocity.com => Airline, hotel reservations • www.bluemountain.com => send e-cards • www.realtor.com => Real Estate web site, you can see the room (inside view) on line • www.staples.com • www.officemax.com Find school supplies • www.officedepot.com

29. Major Challenges to building and using Information Systems • Designing systems that are competitive and efficient • Understanding the system requirements of a global business environment • Creating an information architecture that supports the organization’s goals • Determining the business value of information systems • Designing systems that people can control, understand, and use in a socially and ethically responsible manner.