19-04-2014, 03:19 PM
Business Processes and Information Technology
INTRODUCTION TO INFORMATION SYSTEMS
As “Pottermania” reached epidemic proportions recently, it provided
a good example of how a single business event can strain critical
information systems in even the most advanced organizations. When
each Harry Potter book was due for release, pre-orders for the book
swamped bookstores and Internet booksellers. This demand had an
impact on the supply chain, from the publisher who needed to
predict how many copies to produce, to booksellers who accepted
pre-orders at a record pace, to the Fedex drivers charged with getting
books delivered on the official release date. As the fourth book
neared release, Amazon.com received over 275,000 advance orders
for the single volume, exceeding its previous record-setting preorder
of 43,000 copies of John Grisham’s The Brethren
What Is an Information System?
This section provides a definition for Information Systems (IS) and
defines related terms to establish a background for later study. The
section concludes by discussing how the business professional
interacts with the IS and with the current business environment.
Systems and Subsystems
A system is a set of interdependent elements that together
accomplish specific objectives. A system must have organization,
interrelationships, integration, and central objectives. Figure 1.2a
depicts a system consisting of four interrelated parts that have come
together, or integrated, as a single system, named “system 1.0.” Each
part of a system—in this case, parts 1.1, 1.2, 1.3, and 1.4—is known
as a subsystem. Within limits, any subsystem can be further divided
into its component parts or subsystems. Figure 1.2b depicts
subsystem 1.2 as a system consisting of three subsystems. Notice
that we use the term system (versus subsystem) to describe the area
of immediate focus. For example, in a typical university
Management Uses of Information
An IS serves two important functions within an organization. First,
the IS mirrors and monitors actions in the operations process by
processing, recording, and reporting business events. For example,
the IS processes customer orders; records sales to customers by
updating sales, accounts receivable, and inventory data; and
produces invoices and sales event summaries. This event-based,
operations-oriented function is depicted by the horizontal
information flows shown along the bottom of Figure 1.5.
The vertical information flows shown in Figure 1.5 highlight the
second major function of the IS: to support managerial activities in
the management process, including management decision making.
How do managers use this information? First, they monitor current
operations to keep their ship on course. For example, managers need
to know if enough inventory is being produced each day to meet
expected demand. Managers’ second use of information is to help
them achieve satisfactory results for all of their stakeholders (e.g.,
customers, stockholders).
Data versus Information
Information is data presented in a form that is useful in a decision-
making activity. The information has value to the decision maker
because it reduces uncertainty and increases knowledge about a
particular area of concern. Data are facts or figures in raw form.
Data represent the measurements or observations of objects and
events. To become useful to a decision maker, data must be
transformed into information. The most basic function of an IS, then,
is to transform data into information that is useful in decision
making. What attributes give information its utility value?