Foundations of Information System in Business - Mark John Lado

“A system does not exist in a vacuum;
rather, it exists and functions in an
environment containing other systems.”

 Subsystem: A system that is a component of a
larger system, where the larger system is its
environment.
 System Boundary: A system is separated
from its environment and other systems by its
system boundary.

 Interface: Several systems may share the
same environment. Some of these systems
may be connected to one another by means of
a shared boundary, or interface.
 Open System: A system that interacts with
other systems in its environment is called an
open system

 Adaptive System: A system that has the
ability to change itself or its environment in
order to survive is called an adaptive system.

 An information system model expresses a
fundamental conceptual framework for the major
components and activities of information systems.
An information system depends on the resources of
people, hardware, software, data, and networks to
perform input, processing, output, storage, and
control activities that convert data resources into
information products.

The information systems model outlined in the text
emphasizes four major concepts that can be applied to all
types of information systems:
 People, hardware, software, data, and networks, are the five
basic resources of information systems.
 People resources include end users and IS specialists,
hardware resources consist of machines and media, software
resources include both programs and procedures, data
resources can include data and knowledge bases, and
network resources include communications media and
networks.

 Data resources are transformed by information
processing activities into a variety of information
products for end users.
 Information processing consists of input, processing,
output, storage, and control activities

 The basic IS model shows that an information system
consists of five major resources:
 People resources
 Hardware resources
 Software resources
 Data resources
 Network resources

People Resources:
 People are required for the operation of all information
systems. These people resources include end users and IS
specialists.
 End Users (also called users or clients) are people who
use an information system or the information it produces.
Most of us are information system end users. And most end
users in business are knowledge workers, that is, people who
spend most of their time communicating and collaborating in
teams of workgroups and creating, using, and distributing
information.

 IS Specialists are people who develop and operate
information systems. They include system analysts, software
developers, system operators, and other managerial,
technical, and clerical IS personnel.
 Systems analysts – design information systems based on the
information requirements of end users. (example- LIB)
 Software developers – create computer programs based on
the specifications of systems analysts.
 System operators – monitor and operate large computer
systems and networks.

 Hardware resources include all physical devices and
materials used in information processing.
 Machines - physical devices (computers, peripherals,
telecommunications networks, etc.)
 Media - all tangible objects on which data are
recorded (paper, magnetic disks etc.)

Examples of hardware in computer-based information
systems are:
 Computer Systems – which consist of central processing
units containing microprocessors, and a variety of
interconnected peripheral devices.
 Computer peripherals – which are devices such as a
keyboard or electronic mouse for input of data and
commands, a video screen or printer for output of
information, and magnetic or optical disks for storage of
data resources.

 Software resources include all sets of information
processing instructions.
 Program - a set of instructions that causes a computer to
perform a particular task.
 Procedures - set of instructions used by people to
complete a task.

Examples of software resources are:
 System software – such as an operating system program,
which controls and supports the operations of a computer
system. (e.g.Win, UNIX)
 Application software – are programs that direct
processing for a particular use of computers by end users.
(Word, Photoshop)
 Procedures – are operating instructions for the people
who will use an information system.

 Data versus Information. The word data is the plural of
datum, though data is commonly used to represent both
singular and plural forms. The term’s data and information are
often used interchangeably. However, you should make the
following distinction:
 Data: - are raw facts or observations, typically about physical
phenomena or business transactions. More specifically, data
are objective measurements of the attributes (characteristics)
of entities, such as people, places, things, and events.

 Information: - is processed data, which has been placed
in a meaningful and useful context for an end user. Data
is subjected to a “value-added” process (data processing
or information processing) where:
 - Its form is aggregated, manipulated, and organized.
 - Its content is analyzed and evaluated
 - It is placed in a proper context for a human user

 Data constitutes a valuable organizational resource. Thus,
data resources must be managed effectively to benefit all
end users in an organization. The data resources of
information systems are typically organized into:
 Databases - a collection of logically related records or files. A
database consolidates many records previously stored in
separate files so that a common pool of data records serves
many applications.
 Knowledge Bases - which hold knowledge in a variety of
forms such as facts and rules of inference about various
subjects.

Telecommunications networks like the Internet, intranets, and
Extranets have become essential to the successful electronic
business and commerce operations of all types of organizations
and their computer-based information systems.
Telecommunications networks consist of computers,
communications processors, and other devices interconnected
by communications media and controlled by communications
software. The concept of network resources emphasizes that
communications networks are a fundamental resource
component of all information systems. Network resources
include:

 Communications media (twisted-pair wire, coaxial cable,
fiber-optic cable, and microwave, cellular, and satellite
wireless systems.
 Network support (people, hardware, software, and data
resources that directly support the operation and use of a
communications network).

 Support of business process and operations
 Support of business decision making
 Support of strategies for competitive advantage

 BasicActivities
 Feedback
 Environmental
Actors

 Information Systems Literacy
--- Behavioral and technical approach
 Computer Literacy
--- Focuses on knowledge of IT
 Management Information System (MIS)
--- Focuses on Information System Literacy
--- Issues surrounding development, use, impact of information
systems, used by managers and employees

 Integral Part –ViceVersa
 Coordinate work through structured hierarchy and
business processes
 Business processes → Logically related tasks and
behaviors for accomplishing work
--Fulfilling an order, Developing a new product
--May be informal or include formal rules

 Requires skilled people → Build, Maintain and Use
 AdequateTraining
 Employee attitudes affect ability to use systems
productively
 Role of managers
1. Perceive business challenges
2. Set organizational strategy
3. Allocate human and financial resources
4. Creative work, new products, services

 IT Infrastructure → Foundation or platform that
information systems built on
 Computer hardware
 Computer software

 Data management technology
 Networking and telecommunications technology
--- Internet andWeb, extranets, intranets
---Voice, video communications

 Management Information System (MIS)
--- Provide reports and displays to managers
Example: daily sales analysis reports
 Decision Support Systems (DSS)
--- Provide interactive ad hoc support for decision making
Example: A what-if-analysis to determine where to
spend advertising dollars
 Executive Information Systems (EIS)
--- Provide critical information for executives and
managers
Example: easy access to actions of competitors

 Expert Systems
--- Provide expert advice and act as consultant to users
Example: process monitor, credit application advisor
 Knowledge Management Systems
--- Supports creation, organization of business knowledge
Example: Internet access to best business practices
 Strategic Information Systems
--- Support operations/management processes that
provide strategic product/services for competitive edge
Example: Online stock trading, shipment tracking

Few Business problems are simple or straightforward
 A Model ofThe Problem Solving Process
1. Problem Identification
2. Solution Design
3. Solution Evaluation and Choice
4. Implementation

 Typical Organizational Problem
1. Outdated business processes
2. Unsupportive culture and attitudes
3. Political in-fighting
4. Turbulent business environment, change
5. Complexity of task
6. Inadequate resources

 TypicalTechnology Problems
1. Insufficient or aging hardware, Outdated Software
2. Insufficient telecommunications/database capacity
3. Incompatibility of old systems with

 Typical People Problems
1. Lack of employee training
2. Difficulties of evaluating performance
3. Legal and regulatory compliance
4. Work environment
5. Poor or indecisive management
6. Lack of employee support and participation

 Solution Design
1. Often many possible solutions
2. Consider as many as possible
3. Range of Solutions →Technology, Organization, People
4. Most Successful Solutions → IntegratedApproach

 Evaluation and Choice
1. Cost
2. Feasibility given resources and skills
3. Length of time needed to implement solution

 Implementation
1. Building or purchasing solution
2. Testing solution, employee training
3. Change management
4. Measurement of outcomes
5. Feedback, evaluation of solution

 Problem Solving
--- Sometimes chosen
solution doesn’t work or needs
adjustment

 Accounting
1. Accountants → Information Systems
2. SummarizeTransactions
3. Create Financial Records
4. Organize Data
5. Perform Financial Analysis
 Skills
1. IT, software used in auditing, accounting functions
2. System and network security issues
3. Enterprise systems for financial reporting

 Finance
1. Financial Management/Services → Information Systems
2. Develop Financial Reports
3. Direct Investment Activities
4. Implement Cash Management Strategies
 Skills
1. IT, software used by financial managers and financial
services firms
2. New technologies for financial transactions, trading
3. Enterprise systems for financial reporting

Equities analysts depend heavily on
information systems for organizing
and analyzing very large amounts of
financial data

 Marketing and Advertising
1. Technology driven changes
2. Internet Advertising
 Skills
1. Understanding of Internet, marketing database systems
2. Impact on marketing activities → brand development,
promotion, sales
3. Enterprise systems for product management, sales force
management, customer relationship management

Foundations of Information System in Business - Mark John Lado

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