Read Chapters 1 & 2 in Stair & Reynolds
After successful completion of this lesson you should be able to:
To begin this discussion let’s just consider a “system” as a black box. That has been a traditional view of systems when there was no easy explanation of what was happening. This black box has two unique, identifiable features. It has an opening labeled “input” and an opening labeled “output.” The first step in understanding systems is to understand what are inputs and outputs of a system. I like to think of inputs as the raw material. In information systems terminology we call that raw material data. The outputs of a system are referred to as information. Inside the “black box” some kind of processing takes place that transforms the data into information.
Let’s consider a non-technical example first. In order to make concrete for sidewalks or walls, etc., we need the raw materials. The raw materials are sand, gravel, cement, and water. The raw materials are processed by throwing them into a cement mixer and mixing the ingredients until they are of the proper consistency. Once the mixture reaches the proper consistency, it is removed from the mixer and used to make the sidewalk or wall.
The sand, gravel, cement, and water were the raw materials. Without some kind of processing they were not useful to the builder. After processing, the mixture is now useful to the builder. When we talk of data, it is the raw material. When we talk of information, it is the finished product. Information is the result of some kind of processing of data. Information also has an important additional feature. It is usable. In the cement example the builder could build once the raw materials had been mixed. With systems, the decision makers use information to make decisions and take actions.Systems have three components: inputs, a transformation process, and outputs. Information systems have an additional feature--feedback. Feedback is used to determine whether the system is performing as expected and to make adjustments as needed. The cement example is an example of a system. For an information system we might consider the payroll process.
In a payroll system hours are collected (inputs) and then employee pay is calculated (process). After processing, paychecks are printed (output) and a payroll report (feedback) is produced. Employees receive the paycheck and a manager reviews the payroll report to make sure there are no errors in the paychecks. The hours worked by the employees are the data and the paychecks and payroll report are the information from the system. In this example the paycheck can also serve as a feedback tool, because you know you would complain if there were an error in your check!System performance is typically evaluated from two perspectives, efficiency and effectiveness. The book gives you approaches for understanding both terms. Let me give you another, simple way of distinguishing between the two terms. I like to think of efficiency as “doing things right.” I think of effectiveness as “doing the right things.” The ideal is to be efficient and effective. However, sometimes one gets sacrificed for the other. That sacrifice should be a management decision.
Efficiency improvement could include conversion from paper-based records management to electronic record management. For example, the University changed its staff vacation and sick day paper system to an electronic attendance system. This eliminates handling of paper and speeds the review and approval process of vacation and sick day reporting.
Improvements in efficiency often results in a reduction of staff, reduction in waste, meeting customer orders on time, billing customers more quickly, paying suppliers more quickly, and cost reductions.
Improvements in effectiveness are demonstrated by better supplier relationships, better customer relations, increased profitability, and growth. The use of a customer relationship management system (CRM) could be used to track customer purchases and collect other customer information. This information could then be used to identify new product offerings or product enhancements designed for specific customer needs.
The text suggests that there are six components in a computer-based information system. They are hardware, software, databases, procedures, personnel, and telecommunications. Let’s first get it straight as to which component is most important. People are the most important component of any system. Don’t forget that! Without people, you don’t have an information system. Next, consider the relationship between hardware and software and the relationship between procedures and personnel. Software is the instructions for the hardware. Procedures are the instructions for the personnel. Both pairs work on the databases to produce information. We can consider telecommunications as the element that ties it all together. Together all these elements form a computer-based information system.
A term that you will read frequently is information systems architecture. Very simply this refers to a combination of several concepts. The first of these is business processes. These processes are tasks that are done by members of the organization. These tasks can be as simple as filling out forms, filing material. They could be more complex such as scheduling production or hiring.
The second component of information systems architecture is business systems. These include transaction processing systems, management information systems, decision support systems, expert systems, and other specialized systems. The third component is the technology infrastructure. The technology infrastructure is the hardware, software, databases, procedures, personnel, and telecommunications.
After successful completion of this lesson you should be able to:
In understanding the value-added process, we first must recognize that there is a path that products take from their beginnings as raw materials until they eventually end up in the possession of the final user. There is also a path for services that may be slightly different, but a path nonetheless. An example of the value chain or path is given in the beginning of the second chapter. At each stage of the path, the value of the product is changed and enhanced in some way. What we are interested in here is, what does the term value-added mean and how can information systems add value?
The current view of the value-added process and role of information systems is that the two are interdependent. We use information systems to create the products and services. At the same time we also use information systems to enhance the value of the products and/or services. Let’s consider some examples of how information systems can add value.
Recently a new bookstore opened in my area. The bookstore promises service and value above what other bookstores offer. How can an information system help them do this? One example is their information desk. Online computer inventories of books, music, and magazines make it possible for staff to quickly determine if a requested book is in stock and where the customer can find it. Valuable service has been given to the customer. A customer database can be maintained and targeted mailings sent to selected customers. A scanner is used at the checkout to speed processing of purchases. Again, value is delivered to the customer.
In a bank, information systems are used to access credit information to quickly determine the credit standing of loan applicants. Information systems are used to maintain account information and prepare consolidated bank statements. Information systems make it possible for bank customers to use automated teller machines to get cash, make deposits, and check account balances at any hour of the day. In all these cases value is being created for the bank customers through the use of information systems.
How do we manage the value chain? There are two key aspects to managing a value chain. First, we must manage the supply chain or what travels across the value chain. This field of study is referred to as Supply Chain Management (SCM). SCM involves determining what supplies and their quantities are needed to meet customer demand, what processing approaches should be used, and how to get the finished products to the end user. The second key aspect is Customer Relationship Management (CRM). CRM focuses on managing all interactions with the customer. The goal is to anticipate and meet the needs of the customer and build a loyal customer base. You can quickly see that the two are inter-related. You may also see that SCM and CRM are also closely related to the marketing function. This highlights an important concept. All business functions and processes are inter-connected and interdependent.
A second key topic in this chapter is the concept of strategic competitive advantage. In today’s world businesses compete on a global level. Even the small corner shops are affected by what happens around the world. Businesses are continually looking for some way to get an edge, an advantage over the competition. Porter provides a model of five forces that lead firms to attain competitive advantage. In addition to the forces discussed by Porter, another competitive factor is time. In order to achieve and maintain a competitive advantage, organizations must be able to respond quickly to changes in the environment, changes in the market, and changes implemented by competitors. Information systems can help organizations respond quickly to changes. Information systems can also help these same organizations anticipate change or even instigate change.
Now let’s take a look at information systems management. The basic philosophy behind information systems management and organization is that data and information have value for the firm. This may seem to be a very obvious statement. However, many firms do not have an accurate appreciation for the value of the information that is collected and maintained by the various information systems operating within the organization.
For example, consider the wealth of information collected by grocery store scanners. Initially, the major use of the scanner information was for inventory control purposes. It did not take long for savvy market research firms to recognize the value of the information. These marketing research firms purchased the scanner data from the grocery chains, performed data analyses and developed reports that they then sold back to the grocery chains. In addition, these same research firms then sold the information to the manufacturers of the products being sold in the grocery stores. Information has value!
The role of information systems personnel in an organization is to help organizations recognize the value of the data and information maintained by the organization. In addition, information systems personnel should help the organization make effective use of that data and information. The key goals of the information systems organization and personnel are to use IS to improve the quality of products and services to external and internal customers, improve productivity, align IS with company strategy and processes, reduce IS costs, and provide for ongoing training. All of this is accomplished through three major roles: operations efficiency, systems development, and user support.
Now it is time to submit the Request Form for your Mid-Course Exam. You will have 2 hours to complete the exam. It will be open book but proctored and all questions will be multiple choice.
Next view the PowerPoint presentations for Chapter 1 and Chapter 2.
Then complete the ANGEL Chapter Quiz covering chapters 1 & 2.
Finally, download the instructions for Hands-On Exercise 1 and Hands-On Exercise 2. Do the required calculations, save the worksheets as indicated and submit them to the Car Payment Plan DropBox and Income Statement Project DropBox.