Chapter 1 MIS

Summary

1.         Explain why information systems are so essential in business today.

Information systems are a foundation for conducting business today. In many industries, survival and even existence is difficult without extensive use of information technology. Information systems has become essential for helping organizations operate in a global economy. Organizations are trying to become more competitive and efficient by transforming themselves into digital firms where nearly all core business processes and relationships with customers, suppliers, and employees are digitally enabled. Businesses today use information systems to achieve six major objectives: operational excellence; new products, services, and business models; customer/supplier intimacy; improved decision making; competitive advantage; and day-to-day survival.

2.         Define an information systems from both a technical and a business perspective.

From a technical perspective, an information system collects, stores, and disseminates information from an organization’s environment and internal operations to support organizational functions and decision making, communication, coordination, control, analysis, and visualization. Information systems transform raw data into useful information through three basic activities: input, processing, and output. From a business perspective, an information system provides a solution to a problem or challenge facing a firm and provides real economic value to the business.

3.         Identify and describe the three dimensions of information systems.

An information system represents a combination of management, organization, and technology elements. The management dimension of information systems involves leadership, strategy, and management behavior. The technology dimensions consist of computer hardware, software, data management technology, and networking/telecommunications technology (including the Internet). The organization dimension of information systems involves the organization’s hierarchy, functional specialties, business processes, culture, and political interest groups.

4.         Assess the complementary assets required for information technology to provide value to a business.

An information system is part of a series of value-adding activities for acquiring, transforming, and distributing information to improve management decision making, enhance organizational performance, and, ultimately, increase firm profitability. Information technology cannot provide this value unless it is accompanied by supportive changes in organization and management called complementary assets. These complementary assets include new business models, new business processes, a supportive organizational culture, incentives for management support and innovation, training, and social assets such as standards, laws and regulations, and telecommunications infrastructure. Firms that make appropriate investments in these complementary assets, also known as organizational and management capital, receive superior returns on their information technology investments.

5.         Identify and describe contemporary approaches to the study of information systems and distinguish between computer literacy and information systems literacy.

The study of information systems deals with issues and insights contributed from technical and behavioral disciplines. The disciplines that contribute to the technical approach are computer science, management science, and operations research. The disciplines contributing to the behavioral approach are psychology, sociology, and economics.

Information systems literacy requires an understanding of the organizational and management dimensions of information systems as well as the technical dimensions addressed by computer literacy. Information systems literacy draws on both technical and behavioral approaches to studying information systems. The field of management information systems (MIS) promotes information systems literacy by combining all of these disciplines with a practical orientation toward developing system solutions to real-world problems and managing information technology resources.

Key Terms

Business functions — specialized tasks performed in a business organization, including manufacturing and production, sales and marketing, finance and accounting, and human resources.

Business model — an abstraction of what an enterprise is and how the enterprise delivers a product or service, showing how the enterprise creates wealth.

Business processes — the unique ways in which organizations coordinate and organize work activities, information, and knowledge to produce a product or service.

Complementary assets — additional assets required to derive value from a primary investment.

Computer hardware — physical equipment used for input, processing, and output activities in an information system.

Computer literacy — knowledge about information technology, focusing on understanding how computer-based technologies work.

Computer software — detailed, preprogrammed instructions that control and coordinate the work of computer hardware components in an information system.

Culture — fundamental set of assumptions, values, and ways of doing things that has been accepted by most members of an organization.

Data — streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.

Data management technology — the software that governs the organization of data on physical storage media.

Data workers — people such as secretaries or bookkeepers who process the organization’s paperwork.

Digital firm — organization in which nearly all significant business processes and relationships with customers, suppliers, and employees are digitally enabled and key corporate assets are managed through digital means.

Extranets — private intranet that is accessible to authorized outsiders.

Feedback — output that is returned to the appropriate members of the organization to help them evaluate or correct input.

Information — data that have been shaped into a form that is meaningful and useful to human beings.

Information system — interrelated working together to collect, process, store, and disseminate information to support decision making, coordinate, control, analysis, and visualization in an organization.

Information systems literacy — broad-based understanding of information systems that includes behavioral knowledge about organizations and individuals using information systems as well as technical knowledge about computers.

Information technology (it) — all the hardware and software technologies that a firm needs to use in order to achieve its business objectives.

Information technology (IT) infrastructure — computer hardware, software, data, storage technology, and networks providing a portfolio of shared IT resources for the organization.

Input — the capture or collection of raw data from within the organization or from its external environment for processing in an information system.

Internet — international network of networks that is a collection of hundreds of thousands of private and public networks.

Intranets — an internal network based on Internet and World Wide Web technology and standards.

Knowledge workers — people, such as engineers or architects, who design products or services and create knowledge for the organization.

Management information systems (MIS) — the study of information systems focusing on their use in business and management.

Middle management — people in the middle of the organizational hierarchy who are responsible for carrying out the plans and goals of senior management.

Network — the linking of two or more computers to share data or resources, such as a printer.

Networking and telecommunications technology — physical devices and software that link various pieces of hardware and transfer data from one physical location to another.

Operational management — people who monitor the day-to-day activities of the organization.

Organizational and management capital — investments in organization and management such as new business processes, management behavior, organizational culture, or training.

Output — the distribution of processed information to the people who will use it or to the activities for which it will be used.

Processing — the conversion, manipulation, and analysis of raw input into a form that is more meaningful to humans.

Production or service workers — people who actually produce the products or services of the organization.

Senior management — people occupying the top most hierarchy in an organization who are responsible for making long-range decisions.

Sociotechnical view — design to produce information systems that blend technical efficiency with sensitivity to organizational and human needs.

World Wide Web (WWW) — a system with universally accepted standards for storing, retrieving, formatting, and displaying information in a networked environment.

Review Questions

Describe three ways in which information system are transforming business.

Communication — cell phones, BlackBerry, handhelds, e-mail, online conferencing, and international teleconferencing over the Internet have all become essential tools of business.

Media markets — access to news online, reading and writing blogs, and increases in e-commerce and Internet advertising.

New federal security and accounting laws — spurring the growth of digital information.

List and describe six reasons why information systems are so important for business today.

Six reasons why information systems are so important for business today include:

Operational excellence

New products, services, and business models

Customer and supplier intimacy

Improved decision making

Competitive advantage

Survival

What is an information system? What activities does it perform?

The textbook defines an information system as a set of interrelated components that work together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization. In addition to supporting decision making, coordination, and control, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products.

What is the difference between data and information?

Data are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.

Information is data that have been shaped into a form that is meaningful and useful to human beings.

What is information systems literacy? How does it differ from computer literacy?

Information literacy is more concerned with creating information useful to an organization and its employees, whereas computer literacy addresses the simple use of computers. As technology uses spread beyond traditional computers, information literacy enables employees and organizations to gain an edge over their competition

List and describe the organizational, management, and technology dimensions of information systems.

Organization: The organization dimension of information systems involves issues such as the organization’s hierarchy, functional specialties, business processes, culture, and political interest groups.

Management: The management dimension of information systems involves issues such as training, job attitudes, and management behavior.

Technology: The technology dimension consists of computer hardware, software, data management technology, and networking/telecommunications technology.

What is the purpose of an information system from a business perspective? What role does it play in the business information value chain?

Information systems facilitate the acquisition, transformation, and distribution of information. Information systems can improve decision making, enhance organizational performance, and help increase firm profitability, thus contributing to corporate value.

Explain how the Internet and the World Wide Web are related to the other technology components of information systems

The Internet and World Wide Web are responsible for the increased connectivity and collaboration within and outside the organization.  The Internet and World Wide Web have helped transform the organization’s structure, scope of operations, reporting and control mechanisms, work practices, workflows, and products and services.

Why do some firms obtain greater value from their information systems than others? What role do complementary assets and organizational and management capital play?

Firms must rely on supportive values, structures, and behavior patterns to obtain a greater value from their IT investments. Value must be added through complementary assets such as new business processes, management behavior, organizational culture, and training. The complementary assets and organizational and management capital provide the necessary business culture that values efficiency and effectiveness, decentralized authority, highly-distributed decision rights, and a strong IS development team.

Distinguish between a behavioral and a technical approach to information systems in terms of the questions asked and the answers provided. What major disciplines contribute to an understanding of information systems?

A behavioral approach to information systems focuses on questions such as strategic business integration, behavioral problems of systems utilization, system design and implementation, social and organizational impacts of information systems, political impacts of information systems, and individual responses to information systems. Solutions to problems created by information technology are primarily changes in attitudes, management, organizational policy, and behavior.

A technical approach to information systems emphasizes mathematically-based models to study information systems and the physical technology and formal capabilities of information systems. Students should know the differences between computer science (theories of computability, computation methods, and data storage and access methods), management science (development of models for decision making and managerial practice), and operations research (mathematical techniques for optimizing organizational parameters such as transportation, inventory control and transaction costs).