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Understanding Information Systems for Effective Decision Making

Explore the importance of studying and understanding information systems, distinguish between data and information, evaluate data quality, and learn about the components and characteristics of information systems.

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Understanding Information Systems for Effective Decision Making

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  1. The value of information is directly linked to how it helps decision makers achieve the organization’s goals • Discuss why it is important to study and understand information systems • Distinguish data from information and describe the characteristics used to evaluate the quality of data Principles of Information Systems, Seventh Edition

  2. Models, computers, and information systems are constantly making it possible for organizations to improve the way they conduct business • Name the components of an information system and describe several system characteristics • Identify the basic types of models and explain how they are used Principles of Information Systems, Seventh Edition

  3. Knowing the potential impact of information systems and having the ability to put this knowledge to work can result in a successful personal career, organizations that reach their goals, and a society with a higher quality of life • List the components of a computer-based information system • Identify the basic types of business information systems and discuss who uses them, how they are used, and what kinds of benefits they deliver Principles of Information Systems, Seventh Edition

  4. System users, business managers, and information systems professionals must work together to build a successful information system • Identify the major steps of the systems development process and state the goal of each Principles of Information Systems, Seventh Edition

  5. Information systems must be applied thoughtfully and carefully so that society, business, and industry can reap their enormous benefits • Describe some of the threats to security and privacy that information systems and the Internet can pose • Discuss the expanding role and benefits of information systems in business and industry Principles of Information Systems, Seventh Edition

  6. Introduction • Information system (IS) • A set of interrelated components that collect, manipulate, and disseminate data and information and provide feedback to meet an objective • Examples: ATMs, airline reservation systems, course reservation systems Principles of Information Systems, Seventh Edition

  7. Information Concepts:Data Versus Information • Data: raw facts • Information: collection of facts organized in such a way that they have additional value beyond the facts themselves Principles of Information Systems, Seventh Edition

  8. Table 1.1: Types of Data Principles of Information Systems, Seventh Edition

  9. Figure 1.1: Defining and Organizing Relationships Among Data Creates Information Principles of Information Systems, Seventh Edition

  10. Figure 1.2: The Process of Transforming Data into Information Principles of Information Systems, Seventh Edition

  11. Table 1.2: Characteristics of Valuable Data Principles of Information Systems, Seventh Edition

  12. Table 1.2: Characteristics of Valuable Data (continued) Principles of Information Systems, Seventh Edition

  13. System and Modeling Concepts • System: a set of elements or components that interact to accomplish goals • Components of a system • Input • Processing • Output • Feedback Principles of Information Systems, Seventh Edition

  14. Figure 1.3: Components of a System Principles of Information Systems, Seventh Edition

  15. System Components and Concepts • System boundary: defines the system and distinguishes it from everything else (i.e., the environment) • Configuration: the way system elements are organized or arranged • Systems can be classified as simple or complex, open or closed, stable or dynamic, adaptive or nonadaptive, and permanent or temporary Principles of Information Systems, Seventh Edition

  16. Table 1.3: Systems Classifications and Their Primary Characteristics Principles of Information Systems, Seventh Edition

  17. System Performance and Standards • Efficiency: a measure of what is produced divided by what is consumed • Effectiveness: extent to which system attains its goals • System performance standard: a specific objective of a system Principles of Information Systems, Seventh Edition

  18. System Variables and Parameters • System variable: quantity or item controlled by the decision maker • System parameter: value or quantity that cannot be controlled (e.g., the cost of a raw material) Principles of Information Systems, Seventh Edition

  19. Modeling a System • Model: an abstraction that is used to represent reality • Four major types of models: narrative (based on words); physical (tangible); schematic (graphic representation); mathematical (arithmetic representation) Principles of Information Systems, Seventh Edition

  20. Figure 1.6: Four Types of Models Principles of Information Systems, Seventh Edition

  21. Figure 1.7: The Components of an Information System Principles of Information Systems, Seventh Edition

  22. Input, Processing, Output, Feedback • Input: activity of gathering and capturing raw data • Processing: converting or transforming data into useful outputs • Output: production of useful information, usually in form of documents and reports • Feedback: output used to make changes to input or processing activities Principles of Information Systems, Seventh Edition

  23. Computer-Based Information Systems • Computer-based information system (CBIS) • A single set of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information • Examples: a company’s payroll systems, order entry system, and inventory control systems Principles of Information Systems, Seventh Edition

  24. Figure 1.8: The Components of a Computer-Based Information System Principles of Information Systems, Seventh Edition

  25. Business Information Systems • Most common types of information systems used in business organizations include: • Electronic and mobile commerce systems • Transaction processing systems • Management information systems • Decision support systems Principles of Information Systems, Seventh Edition

  26. Electronic and Mobile Commerce • E-commerce: any business transaction executed electronically between parties • Parties involved include companies (B2B); companies and consumers (B2C); consumers and other consumers (C2C); businesses and the public sector; consumers and the public sector Principles of Information Systems, Seventh Edition

  27. Transaction Processing Systems and Enterprise Resource Planning • Transaction: any business-related exchange, such as payments to employees, sales to customers, and payments to suppliers • Transaction processing system (TPS): an organized collection of people, procedures, software, databases, and devices used to record completed business transactions Principles of Information Systems, Seventh Edition

  28. Figure 1.11: A Payroll Transaction Processing System The inputs (numbers of employee hours worked and pay rates) go through a transformation process to produce outputs (paychecks) Principles of Information Systems, Seventh Edition

  29. Enterprise Resource Planning • Enterprise resource planning (ERP) system: set of integrated programs that can manage a company’s entire set of business operations • ERP systems often coordinate planning, inventory control, production, and ordering Principles of Information Systems, Seventh Edition

  30. Information and Decision Support Systems • Management information system (MIS): an organized collection of people, procedures, software, databases, and devices that provides routine information to managers and decision makers • Primary focus of an MIS is on operational efficiency Principles of Information Systems, Seventh Edition

  31. Figure 1.12: Functional Management Information Systems Principles of Information Systems, Seventh Edition

  32. Management Information Systems • MIS outputs • Scheduled reports • Demand reports • Exception reports Principles of Information Systems, Seventh Edition

  33. Decision Support Systems • Decision support system (DSS): an organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making • Focus of a DSS is on decision-making effectiveness Principles of Information Systems, Seventh Edition

  34. Figure 1.13: Essential DSS Elements Principles of Information Systems, Seventh Edition

  35. Specialized Business Information Systems • Artificial intelligence (AI) systems • Virtual reality systems • Expert systems • Other special-purpose business information systems Principles of Information Systems, Seventh Edition

  36. Figure 1.14: The Major Elements of Artificial Intelligence Principles of Information Systems, Seventh Edition

  37. Systems Development • Systems development: the activity of creating or modifying existing business systems • Systems investigation: gaining a clear understanding of the problem to be solved or opportunity to be addressed • Systems analysis: defines the problems and opportunities of the existing system Principles of Information Systems, Seventh Edition

  38. Figure 1.17: An Overview of Systems Development Principles of Information Systems, Seventh Edition

  39. Systems Development (continued) • Systems design: determines how new system will work to meet business needs defined during systems analysis • Systems implementation: creating or acquiring the various system components defined in design step, assembling them, and putting new system into operation • Systems maintenance and review: check and modify system so that it continues to meet changing business needs Principles of Information Systems, Seventh Edition

  40. Information Systems in Society, Business, and Industry • Information systems must be implemented thoughtfully and carefully • Information systems face a variety of threats from unethical people Principles of Information Systems, Seventh Edition

  41. Figure 1.18: Attacks on Businesses and Other Organizations in One Year Principles of Information Systems, Seventh Edition

  42. Figure 1.19: The Cost and Cause of Computer Attacks Principles of Information Systems, Seventh Edition

  43. Computer and Information Systems Literacy • Computer literacy: knowledge of computer systems and equipment and the ways they function • Information systems literacy: knowledge of how data and information are used Principles of Information Systems, Seventh Edition

  44. Information Systems in the Functional Areas of Business • Finance and accounting (e.g., forecast revenues and business activity; analyze investments; perform audits) • Sales and marketing (e.g., product analysis; promotion analysis; price analysis) • Manufacturing (e.g., process orders; develop schedules; control inventory) Principles of Information Systems, Seventh Edition

  45. Information Systems in Industry • Airline industry (e.g., Internet auction sites) • Investment firms (e.g., analyze stocks and bonds) • Banks (e.g., online check payment) • Transportation industry (e.g., schedule trucks and trains) • Publishing companies (e.g., analyze markets) Principles of Information Systems, Seventh Edition

  46. Information Systems in Industry (continued) • Healthcare organizations (e.g., track patient records) • Retail companies (e.g., process customer orders) • Power management and utility companies (e.g., monitor and control power generation and usage) • Professional services (e.g., provide information on products and services to its consultants) Principles of Information Systems, Seventh Edition

  47. Summary • Data: raw facts • Information: collection of facts organized in such a way that they have value beyond the facts themselves • System: a set of elements that interact to accomplish a goal • Components of a system: input, processing, output, and feedback • A model is an abstraction that is used to represent reality Principles of Information Systems, Seventh Edition

  48. Summary (continued) • Computer-based information system (CBIS): a single set of hardware, software, databases, telecommunications, people, and procedures that are configured to collect, manipulate, store, and process data into information • Transaction processing system (TPS): an organized collection of people, procedures, software, databases, and devices used to record completed business transactions Principles of Information Systems, Seventh Edition

  49. Summary (continued) • Management information system (MIS): an organized collection of people, procedures, software, databases, and devices used to provide routine information to managers and decision makers • Decision support system (DSS): an organized collection of people, procedures, software, databases, and devices used to support problem-specific decision making • Systems development: the activity of creating or modifying existing business systems Principles of Information Systems, Seventh Edition

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