Chapter One Overview of Information Systems

1. 1 Introduction When Rutherford B. Hayes, the 19th chair of the linked States, saw a demonstration of the teleph wizard in the belatedly 1800s, he reportedly commented that while it was a wonderful invention, taskmen would neer custom it. Hayes believed that stack had to gratify compositors case to face to stock substantive employment affairs, and he was non al whizz in that assessment.Few of Hayess generation could foresee the profound potpourris that would be ushered in by the teleph wiz and an melodyer(a)(prenominal) technologies of the day, including steam engines, production machinery transportation technologies such as railroads and automobiles, and communication technologies such as the telegraph and telephone. As we be in the 21st century, we be once again experiencing an intense period of engineering science-en adaptedd innovation, creativity, and excitement that has been spurred by the selective reading and tele communication theory technologies a nd associated changes in our life, pass water and society.We be now inthe study/ experience age a time when breeding and cognition ar mogul. confidential training industrial countries be transforming from industrial- found economies to acquaintance/ noesis-based economy. study is everywhere. development and association befool become critical, strategic as rates for most judicatures. We live in an info society, where billet and wealth additionly depend on reading and experience as central assets. It is a late world of doing occupancy. bloodline and separate replicaions every(prenominal) over the world ar foc intake on tuition and friendship as their key strategic resources. All hards at once, large and sm each, local and ball-shaped, subr out(p)ine info constitutions to fulfill signifi fuckingt handicraft objectives, such as doingal efficiency, client and supplier intimacy, better decision qualification, and current products and services. A proceed blow of training engine room innovations from the Inter salary to wireless ne dickensrks to digital phone is continuing to transform the profession world.These innovations atomic number 18 enabling entrepreneurs and innovative traditional houses to manufacture smart-fashioned products and service, develop nakedfanglight-emitting diode line of job clay sculptures, and transform the day-to-day dribble of c ar. In the action, some doddery jobes, even industries, ar being ruined while naturally feares are springing up. In 2005, journalist Thomas Friedman wrote an important book declaring the world was flat by which he meant that the Internet and world-wide communications had greatly cast downd the economic and cultural goods of developed countries. U. S. nd European countries were in a fight for their economic lives, competing for jobs, commercialises, resources, and even ideas with exceedingly educated, motivated populations in low-wage area s in the less developed world. The globalization social activatement of the world economy greatly upraises the regard as of development dodge of ruless to the transcription of ruless. In todays global communication channel environment, schooling technology is creating new opportunities for giving medicational coordination and innovation. Organizations require powerful reading and communication re master(prenominal)ss to manage occupation on an international poseed series.Manufacturers are development data formations to order supplies and distri alonee near(a)s prompt than ever in the beginning financial institutions are employing them to transfer billions of dollars around the world electronically endueors are victimisation them to set about multi one thousand million-dollar decisions. This globalization presents you and your product line with two challenges and opportunities. The challenge for you as a occupation student is to develop high- take skill s through association and on-the-job experience that whoremasternot be outsourced. schooling dusts will continue to change our work, society and lives. breeding dodge and technologies will overly melt down large roles in your life history. Along with the changes in business come changes in job and careers. No matter whether you are a finance, accounting, solicitude, marketing, operations forethought, or culture transcriptions major(ip), how you work, where you work, and how good you are compensated will all be affected by business study agreements. When interviewing potential employees, business business firms very much look for new hires who know how to manipulation selective learning technologies and systems for achieving bottom- nisus business results.It is wide recognized that appreciation development systems is inherent for autobuss and employees beca pay off use of most organizations indispensableness tuition systems to survive and prosper. Employ ees will depend on the instruction systems to sum up their productiveness. Management will use the training systems to mend their decision- reservation processes. Thus the knowledge of training systems and the world power to format this knowledge to work heap result in a triple-crown psycheal career. The knowledge and skill you learn from this subject will be rich throughout your business career. 1. Computer Literacy and Information System Literacy Today, reason devices are everywhere at work, at school, and at home. galore(postnominal) day-after-day activities each involve the use of or depend on data from a computing machine. Computer advances touch all case-by-cases, families, organizations, and schools (see externalize 1-1). Computers already are an essential disunite of peoples daily lives, as practically as the automobile, television, and telephone. Computers are winning on m some(prenominal) new roles providing vast data resources, fast communication s, effective learning tools, and powerful apply for activities in businesses, schools, and homes.Information systems and technologies commence become a vital persona of conquestful businesses and organizations. They thus constitute an essential cranial orbit of study in business administration and focus. Almost any career in your future will involve a calculating machine in some way. You probably recognize that it will not be delicate to get through the rest of your life without astute about reckoners and culture systems. In todays technology-rich world, a great demand for reckoner and discipline systems professionals exists and continues to grow.The computer and cultivation systems industries offer many an(prenominal) rewarding careers and jobs, but require a unique combine of hands-on computing skills, creative problem settlement ability, and an hearing of business ask. In preparing yourself to enter todays fast-paced, ever-changing, and discipline-intense busi ness environment, you need to beneathstand the new thinking in business. Managers and professionals such as engineers, scientists, or house decorators are collectively known as knowledge workers, since their main contribution to the activities in which they are involved is their knowledge and skills.The limit literacy has been used to describe two oddballs of knowledge that are key to succeed as a knowledge worker in todays information/knowledge-based business environment. One kind of knowledge is computer literacy the otherwise(a) is information systems literacy. The knowledge and visiting of computer systems and the slipway they post are called computer literacy. Computer literacy focuses primarily on knowledge of information technology. This knowledge includes an understanding of computer terminology, recognition of the strengths and weaknesses of the computer, and an ability to use the computer.It also stresses computer equipment and devices ( ironware), programs and in structions ( package program), databases, networking, and telecommunications. The requirements that determine computer literacy change as technology changes. As you study about computers, you will become aware of their importance, their versatility, and their pervasiveness in our society. on that point is no better way to understand computer systems than through interacting with one. So being computer literate also center being able to use computers for some type of practises. However, no one expects you to become a computer expert.Today, information systems erect the communication and uninflected power that firms need for conducting trade and managing businesses on a global scale. In addition to understanding computers, the modern knowledge worker should impart information systems literacy. From an organisational perspective, an information system is an organizational and solicitude solution, based on information technology, to a challenge posed by todays self-propelling environment. To to the full understand information systems, you moldiness(prenominal)iness understand the broader organization, management, and information technology dimensions of information systems (see understand 1-2).Figure 1-2 Organization, management, and information technology dimensions of information systems Information systems are full part of organizations. The key elements of an organization are its people, structure, operating single- valuated functions, politics, and culture. Organizations are unruffled of different takes and specialties. Different levels and specialties in an organization wee different interests and points of view. Information systems come out of this cauldron of differing perspectives, conflicts, compromises, and agreements that are a natural part of all organizations.Managements job is to call for sense out of the many situations face by organizations, make decisions, and formulate action visualises to solve organizational problems. M anagers comprehend business challenges in the environment, they set the organizational strategy for sufficeing and allocate the kind and financial resources to achieve the strategy and coordinate the work. The business information systems in organizations reflect the hopes, dreams, and realities of the managers. Information technology is one of many tools managers use to get away with change.Information technology al-Qaida pop the questions the foundation or platform on which the firm stub signifier its specialized information systems. Each organization must carefully design and manage its information technology infrastructure so that it has the set of technology services it unavoidably for the work it wants to accomplish with information systems. Let us use UPSs big bucks tracking system to let on the organization, management, and technology elements. The organization element anchors the software product tracking system in UPSs utter(a) revenue and production function s (the main product of UPS is a service grimace delivery).It specifies the involve modus operandis for identifying packages with both sender and recipient information, taking inventory, tracking the packages en route, and providing package status reports for UPS guests and guest service representatives. The system must also provide information to satisfy the needs of managers and workers. UPSs management is responsible for monitor service levels and costs and for promoting the companys strategy of combining low-cost and superior service.Management distinct to use automation to increase the ease of sending a package via UPS and of checking its delivery status, thereby decrease delivery costs and increasing gross revenue revenues. The technology conducting this system consists of handheld computers, barcode s chamberpotners, wired and wireless communications networks, desktop computers, UPSs central computer, storage technology for the package delivery data, UPS package tracki ng software, and software to access the World Wide meshwork. The result is an information system solution to the business challenge of providing a high level of service with low prices in the face of mounting competition.Therefore, information systems literacy is knowledge of how and why data, information, knowledge, computer, and information technology are used by organizations and individuals. It includes not exclusively knowledge of computer technology but also flavours of the broader cathode-ray oscillo setting of information technology. Information systems literacy tin wad involve knowledge of how and why people use information technology knowledge of organizations, decision-making forward motiones, management levels, and information needs and knowledge of how organizations can use information systems to achieve their goals.Thus, the key looking at of information systems literacy is knowing how to deploy information technology to admirer an organization achieve its bus iness goals and to gain a competitive prefer. In general, knowing about various types of hardware and software is an example of computer literacy. intimately-read how to use hardware and software to increase profits, cut costs, improve productivity, increase customer satisfaction, and improve management decision-making is an example of information systems literacy. Information system literacy includes a ehavioral as well as a practiced admission to studying information systems. The field of management information systems (MIS) tries to achieve this broader information systems literacy. One of the main objectives of this line is to lay the foundation for information systems literacy. 1. 3 data and Information Today, information is one of an organizations most important and valuable resources. Organizational information systems contain information about people, coifs, things, ideas and events at heart the organization and in the environment surrounding it.By information we me an data that defend being processed into a form that is meaningful and useful to the recipient. selective information are therefore the raw(prenominal) facts for producing information. The relation of data to information is that of raw material to finished product. The information systems process data in useless form into a usable form that is information for intended recipient. As the simplified example shown in Figure 1-3, the student name, ID number, semester, curse codes, and course grades all represent data. The computer processes the data to modernise the grade information (report). Figure 1-3 The process of transforming data into information Organizational activities require information. Producing products, assigning workers, making gross revenue, billing amounts due, and providing customer services are examples of activities that use information. selective information represents real-world facts, such as an employees name, workweekly sales, customer numbers, or produ ct inventory. Data items are arrive at for touch purpose into data structures, file structure, database, and data warehouse. Data are simply raw facts and has little value beyond its existence.Information systems manipulate and process data to fix information. The information in an information system take a variety of forms including text, numbers, pictures, sounds, animations and videos. The value of information is exposit most meaningful in the context of a decision. In other words, the value of information is treatly linked to how it inspection and repairs decision-makers achieve their organizations goals. If there were no current or future choices or decisions affected by a plot of land of information, the information would be unnecessary.It is cited frequently in explaining why information systems that collect vast amounts of data often fail to satisfy managerial information needs. The value of information great power be noticed in following cardinal dimensions * Co ntent information should be accurate, relevant, and complete * metre information should be timely and current * Form information should be provided at the attach level of detail and in the most appropriate form. More specifically, information should harbour genuine characteristics to make it valuable.The characteristics of valuable information include being accurate, verifiable, timely, organized, meaningful, useful, and cost effective. * Accurate information is correct information. imprecise information often is worse than no information, because inaccurate information can lead to incorrect decisions. For example, you assume that your transcript decent list your grades. If your transcript incorrectly reports low grades in your major courses, a potential employer dexterity deny you an interview. * Verifiable information means that the information can be confirm by the user.For example, in the beginning hopeing on the cumulative GPA on your transcript, a potential employe r might want to check that the GPA is cipher correctly. The potential employer can verify the accuracy of the accumulated GPA by calculating it from the individual semester GPA values. * Timely information has an age desirable to its use. Your transcript, for example, has value for a potential employer only if the employer receives it in time to make a hiring decision. Although most information loses its value with time, some information, such as information on trends, gains value as time passes and to a greater extent information is obtained.Your transcript, for example, gains value as you complete to a greater extent than coursework because it reflects your work ethic and dedication over a time period. * Meaningful information is relevant to the person who receives it. Because certain information is meaningful only to specific individuals or groups, unnecessary information should be eliminated. * Cost-effective information costs less to produce than the value of the resulting information. nigh organizations periodically review the information they produce in reports to determine if the reports provide valuable information.Based on that review, the companies can determine whether to continue, scale rear end, or even eliminate these reports. The need for timely information can change for each business decision. Some decisions require weekly or monthly information while other decisions require daily information. patness is an aspect of information that depends on the situation. In some industries such as insurance and construction, information that is a few days or weeks previous(a) can be relevant, while in other industries such as 911 centers and stock trading information that is a few minutes old can be almost worthless. real time information means immediate, up-to-date information. Real-time systems provide real-time information in response to query requests. umteen organizations use real-time systems to exploit key corporate transactional inform ation. Real-time systems provide valuable information for supporting corporate strategies such as customer descent management. The growing demand for real-time information stems from organizations need to make faster and much than effective decisions, keep smaller inventories, operate more efficiently, and track jauntment more carefully.Nevertheless, timeliness is relative. Organizations need fresh, timely information to make good decisions. Information also needs to be timely in the sense that it meets employees needs, but no more. If employees can absorb information only on an hourly or daily basis, there is no need to gather real-time information in smaller increments. many people request real-time information without understanding one of the biggest pitfalls associated with real-time informations continual change. Imagine the following scenario Three managers meet at the end of the day to discuss a business problem.Each manager has gathered information at different times d uring the day to create a picture of the situation. Each managers picture whitethorn be different because of this time discrepancy. Their views on the business problem whitethorn not match since the information they are basing their analysis on is continually changing. This approach whitethorn not speed up decision making, and may actually slow it down. Organizations must rate the timeliness of the information required for each business decision. Organizations do not want to find themselves using real-time information to make a bad decision faster.Information and knowledge are comme il faut the foundation for many new products and services. Information/ knowledge-intense products such as computer games require a great deal of knowledge to produce. Entire new information-based services have sprung up, such as Lexis, Dow Jones News, and the States Online. These fields are employing millions of people. Information technology constitutes more than 75 part of the invested capital in se rvice industries such as finance, insurance, and real estate. intimacy is used more intensively in the production of traditional products as well.In the automobile industry, both design and production now rely to a great extent on knowledge and information technology. 1. 4 Information Systems 1. 4. 1 The excogitation of System System concepts underlie the field of information systems. A system is a set of elements or components that operate together to accomplish an objective. many other(prenominal) examples of systems can be found in the physical and biological sciences, in modern technology, and in compassionate society. A system (sometimes called a dynamic system) has three basic interacting components or functions * Input involves capturing and assembling elements that enter the system to be processed.For example, raw materials, energy, data, and human effort must be secured and organized for bear on. * Processing involves transforming processes that convert input into o utput. Examples are a manufacturing process, the human breathing process, or mathematical calculations. * Output involves transferring elements that have been produced by a version process to their ultimate destination. For example, finished products, human services, and management information must be transmitted to their human users. The system concept becomes even more useful by including two additional components feedback and control.A system with feedback and control components is sometimes called a cybernetic system, that is, a self-monitoring, self-regulating system. * Feedback is data about the arrangeance of a system. For example, data about sales performance is feedback to a sales manager. * Control involves monitoring and evaluating feedback to determine whether a system is pitiful toward the attainment of its goal. The control function then makes necessary adjustments to a systems input and processing components to ensure that it produces proper output.For example, a sales manager exercises control when reassigning salespersons to new sales territories after evaluating feedback about their sales performance. 1. 4. 2 Information Systems An information system is a specialized type of system and can be defined in a number of different ways. An information system can be defined technically as a set of interrelated information technology components that collect (or retrieve), process, store, and distribute data and information and provide a feedback/control mechanism to meet an objective.From a business perspective, information systems can be defined as a combination of hardware, software, and telecommunications networks which people build and use to collect, create, and distribute useful data and information, typically in organizational settings. Information systems support managers and workers make decisions, control operations, essay problems, visualize complex subjects, and create new products and services. An information system contains informa tion about an organization and its surrounding environment.The basic activities of input, processing and output in an information system produce the information that organization need for decision-making and operations. An information system also requires feedback and control components to meet an objective (see Figure 2-4). Figure 1-4 An information system In an information system, input is the activity of forum and capturing raw data from inside the organization or from its external environment. For example, in producing paychecks, the number of hours worked for every worker must be collected before the pay amounts can be calculated and checks can be printed.Processing involves converting or transforming data into more meaningful form. Processing can involve making calculations, making comparisons and taking alternative actions, and storing data for future use. In the payroll segment example, the required processing may first involve calculating gross pay. If weekly hours work ed are greater than 40 hours, overtime pay must be determined. Then deductions are subtracted from gross pay to get net pay. Output involves producing useful information in a proper form such as reports, paychecks or documents, and transferring the processed information to the user.In some cases, output from one information system can become input for another. Information systems also provide feedback/control mechanism to allow people to evaluate the performance of the systems and make necessary changes to input or processing activities. Information technologies (IT) are tools used to build information systems. Information technologies include hardware, software, database, networks, and other related components. Information systems use and contain these technologies to meet the information needs of different users.The information technology, then, must support the goal of the information system, which is to provide accurate, timely, relevant, complete, well-formatted information th at users value. Computer computer computer architecture ensures a fit in the midst of information systems and technologies. Computers are valuable tools. As technology advances and computers moderate into every view of daily living, computers have become an essential part of organizational information processing because of the power of the technology and the volume of data to be processed.When we use the term information systems, we are referring to computer-based information systems (CBIS) organizational information systems that rely on computer technology to collect, process, store and disseminate information. A CBIS is smooth of hardware, software, database, telecommunications, people, and protocols/procedures, as shown in Figure 1-5. Figure 1-5 The components of an information system In a computer-based information system, hardware consists of physical computer equipment and associated devices used to perform input, processing, and output activities.Software is a broad term given to the instructions that direct the operation of the hardware. Database contains all data utilized by application software. Telecommunications is the electronic transmission of signals for communications and enables organizations to link computer systems into effective networks. Information systems personnel office include all the people who develop, program, operate, manage, use and maintain the information systems. Protocols are standards and guidelines used for designing and deploying information systems.Procedures include strategies, policies, methods, and rules for developing, managing and using the information systems. Although computer-based information systems use computer technology to process raw data into meaningful information, there is a sharp distinction between a computer system and an information system. Electronic computers and related software programs are the technical foundation, the tools and materials, of modern information systems. Computer systems provide the equipment and software for processing, storing and distributing information. Knowing how computer systems work is important in esigning solutions to organizational problems, but computer systems are only part of an information system. Computers and programs alone cannot produce the information a particular organization needs. To understand information systems, you must understand the problems they are designed to solve, their architectural and design elements, and the organizational processes that lead to these solutions. In other words, to be information systems literate as opposed to computer literate, you must understand the broader organization, management, and technology dimensions of information systems. 1. 4. Enterprise System computer architectures System architecture refers to the arrangement of software, hardware, and tasks in an information system needed to achieve a specific usefulity. To support the volume and complexity of todays users and application req uirements, information technology needs to take a fresh approach to attempt system architectures by constructing smarter, more flexible environments that protect from system failures and disruptes. Enterprise system architectures include the plans for how an organization will build, deploy, use, and share its data, processes, and IT assets.A co-ordinated try system architecture will standardize enterprisewide hardware and software, with tighter link up to the business strategy. A steady enterprise system architecture can decrease costs, increase standardization, promote recycle of IT assets, and speed development of new systems. The right enterprise system architecture can make IT cheaper, strategic, and more responsive. Enterprise system architectures are neer static they continually change. Organizations use enterprise system architects to help manage change.An enterprise system architect is a person grounded in technology, fluent in business, a unhurried diplomat, and prov ides the important bridge between IT and the business. An enterprise system architect is costly and generally receives a salary of $180,000 per year on average. Companies that have created solid enterprise system architectures are reaping huge rewards in savings, flexibility, and business alignment. grassroots enterprise architectures contain three components, as shown in Figure 2-6. Figure 1-6 Three components of enterprise system rchitecture Information Architecture Information architecture identifies where and how important information, like customer records, is maintained and secured. A single rilievo or restore failure can cost an organization more than time and silver some data cannot be recreated, and the business comprehension lost from that data can be tremendous. Three primary areas an enterprise information architecture should focus on include back up and recovery, disaster recovery, and information shelter system. Each year businesses lose time and money becau se of system crashes and failures.One way to minimize the damage of a system crash is to have a rest and recovery strategy in buttocks. A backup is an exact copy of a systems information. retrieval is the ability to get a system up and running in the even of a system crash or failure and includes restoring the information backup. Organizations should choose a backup and recovery strategy that is in line with its business goals. If the organization deals with large volumes of critical information, it will require daily backups, perhaps even hourly backups, to storage servers.Deciding how often to back up information and what media to use is a critical business decision. If an organization decides to back up on a weekly basis, then it is taking the happen that, if a total system crash occurs, it could lose a weeks worth of work. If this risk is unacceptable, then the organization needs to move to a daily backup strategy. Some organizations find the risk of losing a days worth of wo rk too high and move to an hourly backup strategy. Two techniques used to help in case of system failure are fault tolerance and failover.Fault tolerance is a computer system designed that in the event a component fails, a backup tolerance can be provided with software, or engraft in hardware, or provide by some combination. Failover is a backup operational mode in which the functions of a computer component are assumed by secondary system components when the primary component becomes un purchasable through either failure or scheduled downtime. A failover procedure involves automatically offloading tasks to a standby system component so that the procedure si as seamless as possible to the end user.Disasters such as power outages, floods, and even harmful hacking strike businesses every day. Organizations must develop a disaster recovery plan to check for such occurrences. A disaster recovery plan is a detailed process for recovering information or an IT system in the event of a ca tastrophic disaster such as a fire or flood. A comprehensive disaster recovery plan takes into consideration the place of the backup information. umpteen organizations store backup information in an off-site instalment. A hot site is a separate and fully fit facility where the company can move immediately after a disaster and resume business.A cold site is a separate facility that does not have any computer equipment, but is a place where employees can move after a disaster. Security professionals are under increasing pressure to do the job right and cost-effectively as networks extend beyond organizations to remote users, partners, and customers, and to cell phones, PDAs, and other mobile devices. Regulatory requirements to rampart data have increased. Concerns about identify theft are at an all-time high. Hacking and other unauthorized access contribute to the approximately 10 million instances of identity theft each, according to the Federal Trade Commission.A good informati on architecture includes a strong information security measures plan, along with managing user access and up-to-data antivirus software and patches. Managing user access to information is a critical piece of the information architecture. There is little doubt that security is a top priority for business managers, regardless of the size of their company. The main focus for most managers is preventing hackers, spammers, and other malcontents from entering their networks, and they are looking to enhance their network-security-management, intrusion-detection, content-filtering, and anti-spam software.Infrastructure Architecture Infrastructure architecture includes the hardware, software, and telecommunications equipment that, when combined, provide the underlying foundation to support the organizations goals. As an organization changes, its systems must be able to change to support its operations. If an organization grows by 50 percent in a single year, its systems must be able to hand le a 50 percent growth rate. Systems that cannot adapt to organizational changes can bad hinder the organizations ability to operate. The future of an organization depends on its ability to meet its artners and customers on their terms, at their pace, any time of the day, in any geographic localization principle. The following are the quintet primary characteristics of a solid infrastructure architecture 1. Flexibility Organizations must watch todays business, as well as tomorrows, when designing and make systems. Systems must be flexible enough to meet all types of business changes. For example, a system night be designed to include the ability to handle multiple currencies and languages, even though the company is not currently performing business in other countries.When the company starts growing and performing business in new countries, the system will already have the flexibility to handle multiple currencies and languages. If the company failed to recognize that its busin ess would someday be global, it would need to redesign all its systems to handle multiple currencies and languages, not easy once systems are up and running. 2. Scalability Scalability refers to the ability of a system to increase in size as demand warrants. If an organization grows faster than anticipated, it might all types of performance degradations, ranging from running out of storage piazza to a slowdown in transaction speeds.Capacity planning determines the future IT infrastructure requirements for new equipment and additional network capacity. Performing a capacity plan is one way to ensure the IT infrastructure is scalable. There are three steps you can take to meet the demands for service at your system scale hardware vertically, scale hardware horizontally, and improve the processing architecture of the system. Vertical scaling refers to increasing the processing poser of individual components. even scaling refers to employing multiple computers to share the workload an d increase the footprint of the installation.Improving the processing architecture is a combination of vertical and horizontal scaling, combined with distorted design decisions. 3. Reliability Reliability ensures all systems are functioning correctly and providing accurate information. Reliability is another term for accuracy when discussing the correctness of systems deep down the context of efficiency IT metrics. 4. Availability High availability refers to a system or component that is continuously operational for a desirably long length of time. Availability is typically measured relative to 100 percent operational.A widely held but difficult-to-achieve standard of availability for a system is known as five 9s (99. 999 percent) availability. Systems, however, must come down for maintenance, upgrades, and fixes. One challenge organizations face is determining when to schedule system downtime if the system is expected to operate continually. Many organizations overcome this prob lem by having plain systems, allowing the organization to take one system down by switching over to a redundant system. 5. Performance Performance measures how quickly a system performs a certain process or transaction.Not having enough performance capacity can have a devastating, negative impact on a business. People unremarkably use IT metrics to measure the system architecture. Efficiency IT metrics measure the performance of the IT system including throughout, speed and availability. Effective IT metrics measure the impact of the IT system on business processes and activities including customer satisfaction, conversion rates, and sell-through increases. Application Architecture Application architecture determines how applications integrate and relate to each other.Advances in integration technology are providing new ways for designing more agile, more responsive enterprise architectures that provide the kind of value businesses need. With these new architectures, IT can build new business capabilities faster, cheaper, and in a vocabulary the business can understand. Web services promise to be the next major frontier in computing. Web services contain a repertoire of Web-based data and procedural resources that use shared protocols and standards permitting different applications to share data and services.The major application of Web services is the integration among different applications. originally Web services, organizations had trouble with interoperability. Interoperability is the capability of two or more computer systems to share data and resources. If a supply chain management system can share data with a customer relationship management system, interoperability exists between the two systems. Web services encompass all the technologies that are used to transmit and process information on and crossways a network, most specifically the Internet.A Web service is really a piece of useful software code. A software developer can quickly build a ne w application by using many of these pieces of reusable code. For example, a Deposit Web service for a banking system might allow customers to perform the task of depositing money to their accounts. The Web service could be used by a bank teller, by the customer at an ATM, and by the customer performing an online transaction through a Web browser. The trick to expression Web service is finding the right level of granularity.An open system is a broad, general term that describes nonproprietary IT hardware and software made on hand(predicate) by the standards and procedures by which their products work, making it easier to integrate them. The designs of open systems allow for information sharing. In the past different systems were main(a) of each other and operated as individual islands of control. The sharing of information was complete(a) through software drivers and devices that routed data allowing information to be translated and shared between systems.Open system integration is designed to * Allow systems to seamlessly share information. The sharing of information reduces the total number of devices, resulting in an overall decrease in cost. * trespass on enterprise architectures. This avoids installing several independent systems, which creates duplication of devices. * close out proprietary systems and promote competitive pricing. Utilization of open systems allows users to purchase systems competitively. 1. 5 The Role of Information Systems in Business 1. . 1 Business milieu Business students frequently ask, Why do we need to study information technology? The answer is simple Information technology is everywhere in business. Information technology plays a critical role in reducing costs, improving productivity and generating growth by facilitating communication and increasing business intelligence. Information technology is supplying the foundation for new business models, new business processes, and new ways of distributing products, services a nd knowledge.Companies are relying on information technology and telecommunications to conduct more of their work electronically, seamlessly linking factories, offices, sales forces, managers, customers, and suppliers around the globe. dread information technology provides great insight to anyone learning about business. Business students who understand technology have an advantage in business. Figure 1-7 vii major factors that affect todays business environment Before discussing the role of information systems in organizations, lets xamine some of the most important factors shaping todays new business. These and other factors have altered the environment of business and posed new challenges to business firms and their management. To you, these factors can be translated into a substantial career opportunity, if you understand them and prepare yourself through information to take advantage of them. Figure 2-7 lists seven important factors including globalization, competition, i nformation as a key resource, organization restructuring, end-use computing, electronic commerce, and practical(prenominal) workplace.Emergence of the global economy means that business today is global business. The success of firms today and in the future depends on their ability to manage business globally. Business globalization greatly enhances the value of information systems to organizations and offers new opportunities to business. Organizations need powerful information systems and communications systems to conduct trade and manage businesses on a global scale. Obviously, globalization has increased competition. Information technology is another reason competition is heating up.Globalization and information technology bring new threats to domestic business firms. Customers now can use global communication and information systems to shop in a worldwide marketplace, obtaining price and fictitious character information reliably 24 hours a day. To become competitive participan ts in international markets, firms need powerful information and communication systems. In the information age, information is so important that businesses must have information to be successful. The need to capture and record information about what customers want has led to many databases and data warehouses.These databases and data warehouses contain valuable information to help firms to throb with the pulse of marketplace. These databases and data warehouses of great economic value are based on new information technologies. Today, many organizations are restructuring in a variety of ways. The explosive growth in computing power and networks is turning organizations into networked enterprises, which allow organizations to redesign and reshape their structures, scope of operations, control mechanisms, work practices, work flows, products, and services.Many organizations have reduced the number of levels in their organizational hierarchies. In these flatter organizations, employees are empowered to make more decisions than in the past. contemporary information technology can make more information available to line workers so they can make decisions that previously had been made by managers. Companies can use information and communications technologies to organize in more flexible ways, increasing their ability to respond to changes in the marketplace, to take advantage of new business opportunities, and to reduce the cost of obtaining products and services from outside the firm.Many organizations use information technology to recast the management process, providing powerful new capabilities to help managers plan, organize, lead, and control. One important trend is using information technology for enterprise resource planning. For example, more and more firms are using the Enterprise option Planning (ERP) system. The ERP system is a business information system that integrates all facets of the business, including planning, purchasing, manufacturing, sales, fi nance and human resources.The ERP system creates an integrated database to coordinate business activities within and across functional areas by sharing consistent information, and automates many business processes. Information and telecommunications technologies are creating new ways of conducting business electronically both inside and outside the firm. The Internet is emerging as the primary technology platform for electronic commerce. Electronic commerce is the computerized process of buying and sell goods and services through the Internet, networks, and other digital technologies.The Internet links millions of organizations and individuals into a single network, creating the foundation for a vast electronic marketplace. An electronic market is an information system that links together many buyers and sellers to exchange information, products, services, and payments. Many organizations are increasingly apply Internet technology to facilitate the management and coordination of ot her business processes within the firm publishing companys policies and work procedures, programing work flow, reviewing production plan, revising design documents, and so on, which is called electronic business.Information and telecommunications technologies have eliminated distance as a factor for many types of work in many situations. Many companies are using networked information systems to coordinate their geographically distributed capabilities. Works can be done wherever the employees are located. The term virtual workplace describes a technology-enabled working arrangement where work can be done at virtually any geographical location as along as the work site is linked to one or more of the firms fixed locations by some type of telecommunications capability.Some companies are even using networked information systems to coordinate with other organizations such as suppliers, distributor, or even competitors as virtual organizations to create and distribute new products and s ervices without being limited by traditional organizational boundaries or physical location. Intensive use of information technology in business firms, coupled with equally significant organizational redesign, has created a new type of business the fully digital firm. The digital firm can be defined along several dimensions.A digital firm is one where intimately all of the organizations significant business relationships with customers, suppliers, and employees are digitally enabled and mediated. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations. Key corporate assetsintellectual property, core competencies, and financial and human assetsare managed through digital means. In a digital firm, any piece of information required to support key business decisions is available at anytime and anywhere in the firm.Digital firms sense and respond to their environments far more rapidly than traditional firms, gi ving them more flexibility to survive in turbulent times. Digital firms offer extraordinary opportunities for more global organization and management. By digitally enabling and streamlining their work, digital firms have the potential to achieve unprecedented levels of profitability and competitiveness. A few firms, such as cisco Systems, Dell Computer Corporation or Google, are close to be glide slope fully digital firms, using the Internet to drive every aspect of their business.In most other companies, a fully digital firm is belt up more vision than reality but this vision is driving them toward digital integration. For todays managers, information technology is not simply a useful handmaiden, an enabler, but rather it is the core of the business and a primary management tool. There are four major systems that help define the digital firm. depict chain management systems seek to automate the relationship between suppliers and the firm to optimize the planning, sourcing, manufa cturing, and delivery of products and services.Customer relationship management systems attempt to develop a coherent, integrated view of all the relationships a firm maintains with its customers. Enterprise systems create an integrated enterprise-wide information system to coordinate key internal processes of the firm, consolidation data from manufacturing and distribution, sales, finance, and human resources. Finally, knowledge management systems seek to create, capture, store, and disseminate firm expertise and knowledge.Collectively, these systems represent the areas where corporations are digitally integrating their information flows and making major information system investments. For example, building only cars that customers order and building them in record time has been every automakers dream. Now, it appears that Toyota Motor Corporation is coming close to making that dream come true. Toyota is using new software tools and Internet technology to drive its processes for d esigning and manufacturing automobiles and to integrate them with customers and suppliers.The company is moving toward a digital firm organization. In many organizations, end users are developing a growing percentage of information systems with little or no formal assistance from technical specialists. This phenomenon is called end-user computing. Information technology education programs at both the college and pre-college level and easy-to-use of both computer hardware and software have made more and more managers and employees have good computing knowledge and skills.End user computing involves you, as a future knowledge worker, in more than just developing a budget using spreadsheet software, creating a presentation using presentation graphics software, or using a system that someone else developed. It requires you to take an active role in developing systems that support your specific needs or the needs of a team. 1. 5. 2 Functional Areas in Business Understanding information t echnology begins with gaining an understanding of how businesses function and ITs role in creating efficiencies and effectiveness across the organization.Typical businesses operate by functional areas. Each area undertakes a specific core business function. These functional areas are interdependent (see Figure 2-8). For example, sales must rely on information from operations to understand inventory, place orders, calculate transportation costs, and gain insight into product availability based on production schedules. For an organization to succeed, every department or functional area must work together sharing common information. Information technology can enable departments to more fficiently and effectively perform their business operations. Figure 1-8 Common functional areas in business To perform the MIS function effectively, almost all organizations today, particularly large and medium-sized ones, have an internal IT department. The plans and goals of the IT department must al ign with the plans and goals of the organization. Information technology can enable an organization to increase efficiency in manufacturing, retain key customers, seek out new sources of supply, and introduce effective financial management.Information technology is a comparatively new functional area, having been around formally in most organizations only for about 40 years. Job titles, roles, and responsibilities often differ from organization to organization. Most organizations maintain rigs such as foreland executive officer (CEO), foreman financial officer (CFO), and chief operations officer (COO) at the strategic level. Recently there are more IT-related strategic positions such chief information officer (CIO), chief technology officer (CTO), chief security officer (CSO), chief privacy officer (CPO), and chief knowledge officer (CKO).The CIO is responsible for overseeing all uses of information technology and ensuring the strategic alignment of IT with business goals and ob jectives. The CTO is responsible for ensuring the throughput, speed, accuracy, availability, and reliability of an organizations information technology. The CSO is responsible for ensuring the security of IT systems and developing strategies and IT safeguards against attacks from hackers and viruses. The CPO is responsible for ensuring the ethical and legal use of information within an organization.The CKO is responsible for collecting, maintaining, and distributing the organizations knowledge. The CKO designs programs and systems that make it easy for people to reuse knowledge. All the above IT positions and responsibilities are critical to an organizations success. plot of land many organizations may not have a different individual for each of these positions, they must have leaders taking responsibility for all these areas of concern. It is not always easy for managers to make the right choices when using IT to support business initiatives.Most managers understand their business initiatives well, but are often at a loss when it comes to knowing how to use and manage IT effectively in support of those initiatives. Managers who understand what IT is, and what IT can and cannot do, are in the best position for success. Individuals anticipating a successful career in business must understand information technology including * Information technology basics. * Roles and responsibilities in information technology. * touchstone information technologys success. 1. 5. 3 The Role of Information Systems in BusinessIn 2007, American business invested over $1 trillion in information systems hardware, software and telecommunications equipment, more than half of all capital investment in the United States. In addition, they spent another $250 billion on business and management consulting and services, much of which involves redesigning firms business operations to take advantage of these new technologies. More than half of all business investment in the United States eac h year involves information systems and technologies. In 2007, more than 40 million U. S. usinesses had cot-com Internet sites registered. E-commerce and Internet advertising are booming. Companies today manage their operation and inventories in near real time in order to reduce their production and overhead costs and get to market faster. What makes information systems so essential today? Why are businesses investing so much in information systems and technologies? They do so to achieve the following sixer important business objectives 1. Operational Excellence Businesses continuously seek to improve the efficiency of their operations in order to achieve higher profitability.Information systems and technologies are some of the most important tools available to managers for achieving higher levels of efficiency and productivity in business operations, especially when coupled with changes in business practices and management behavior. 2. New Products, Services and Business Models In formation systems and technologies are a major enabling tool for firms to create new product and services, as well as entirely new business models. A business model describes how a company produces, delivers, and sells a product or service to create wealth. . Customer and Supplier Intimacy Information systems can help a business know its customers and serves them well, the way they want to be served, the customers generally respond by returning and purchasing more. This raises revenues and profits. Likewise with suppliers the more a business engages its suppliers, the better the suppliers can provide vital inputs. This lowers costs. 4. Improved Decision devising Many business managers operate in an information fog bank, never really having the right information at the right time to make an informed decision.Instead, they rely on forecasts, best guesses, and luck. The result is over- or underproduction of goods, misallocation of resources, and shortsighted response times. Informati on systems and technologies have made it possible for managers to use real-time data from the marketplace when making decisions. 5. Competitive Advantage Information systems and technologies can help a business achieve a competitive advantage doing things better than its competitors, charging less for superior products, and responding to customers and suppliers in real time. 6.Survival Business firms invest in formation systems and technologies because they are necessities of doing business. Sometimes these necessities are driven by industry-level changes. Many federal and state statutes and regulations create a legal vocation for companies to retain records. Firms turn to information systems and technologies to provide the capability to respond to these information retention and reporting requirements. Information systems directly affect how top management draw up long-tern planning, how managers make decisions, and what products and services are produced and how.In fact, informat ion systems play a strategic role in the life of the firm. Figure 2-9 illustrates the relationship between businesses and information systems. Figure 1-9 Growing interdependence between businesses and information systems There is a growing interdependence between business strategy, organizational structure, operation rules and procedures, and production on the one hand, and IT infrastructure, IT strategy and information system management on the other. A change in any of these components often requires changes in other components.Existing information systems can act as a constraint on businesses. Often, what the organization plans to do in next five years depends on what its information systems will permit it to do. Developing new products and service, increasing market share, becoming the high-quality or low-cost producer, providing better customer service, and increasing employee productivity depend more and more on the scope and quality of information systems in the organization. Businesses are not in the business of processing information for its own sake. Instead they rocess information in order to improve organizational performance and produce profits. From a business perspective, an information system is an important instrument for creating value for the organization. There are many ways in which information systems can contribute to firm value, including increasing the firms return on its investments, enhancing the companys strategic position, or increasing the market value of the firms stock. Information processing activities support management decision making, enhance the implementation of business processes and as a result increase business value.Every business has an information value chain, shown in Figure 2-10, in which raw information is systematically acquired, and then transformed through various stages that add value to that information. From this perspective, information systems are part of a series of value-adding activities for acquiring, transforming, and distributing information that managers can use to improve decision making, enhance organizational performance, and ultimately increase firm profitability. Figure 1-10 Business information value chain