Essentials of MIS – Laudon & Laudon -
12th edition
Chapter 1 – Business Information Systems in Your Career
1.1 Why are information systems so essential for running and managing a business
today?
How information systems are transforming business
• Companies today manage their inventories in near real time to reduce their overhead costs
and get to market faster.
• Questions asked for companies nowadays:
- Do you have a solid online customer relationship program in place?
- Do you know what your customers are saying about your firm?
- Is your marketing department listening?
- Is your advertising department reaching this new web-based customer?
- Does your compliance department meet the minimal requirements for storing financial,
health and occupational information?
What’s new in management information systems?
• New businesses and industries appear, old ones decline, and successful firms are those that
learn how to use the new technologies.
• Three interrelated changes in technology:
1. The mobile digital platform composed of smartphones and tablet devices.
2. The growing business use of bid data, including the Internet of Things (IoT) driven by
billions of data-producing sensors.
3. The growth in cloud computing, by which more and more business software runs over
the Internet.
• More and more business computing is moving from PCs and desktop machines to these
mobile devices. Managers are increasingly using these devices to coordinate work,
communicate with employees, and provide information for decision making.
• Managers routinely use online collaboration and social technologies to make better, faster
communication.
• Social network is where work is done, where plans are executed, where managers manage.
• Collaboration spaces are where employees meet one another, even when they are
separated by continents and time zones.
Globalization challenges and opportunities: a flattened world
• The industrial revolution was a worldwide phenomenon energized by expansion of trade
among nations, and since that period, nations have been both competitors and collaborators
in business.
• The Internet has greatly heightened both the competitive tensions among nations as global
trade expands and strengthened the benefits that flow from trade.
• ‘The world is flat now’ → the Internet and global communications had greatly expanded the
opportunities for people to communicate with one another and reduced the economic and
cultural advantages of developed countries.
• A growing percentage of the economy of the United States and other advanced industrial
countries in Europe and Asia depends on imports and exports.
• The emergence of the Internet into a full-blown international communications system has
drastically reduced the costs of operating and transacting on a global scale.
, - What’s New in MIS
Business drivers of information systems
• Businesses invest so much in information systems and technologies to achieve six important
business objectives: operational excellence; new products, services, and business models;
customer and supplier intimacy; improved decision making; competitive advantage; survival.
• Operational excellence: businesses seek to improve the efficiency of their operations to
achieve higher profitability.
• New products, services and business models: information systems and technologies are a
major enabling tool for firms to create new products and services, as well as entirely new
business models.
- Business model: describes how a company produces, deliver, and sells a product or
service to create wealth.
, • Customer and supplier intimacy: when a business knows 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. Also holds for suppliers → lowers costs.
• Improved decision making: information systems and technologies have made it possible for
managers to use real-time data from the marketplace when making decisions.
• Competitive advantage: doing things better than your competitors, charging less for superior
products, and responding to customers and suppliers in real time all add up to higher sales
and higher profits that your competitors cannot match.
• Survival: business firms also invest in information systems and technologies because they
are necessities of doing business, which can be driven by industry-level changes.
1.2 What exactly is an information system? How does it work? What are its people,
organizational, and technology components?
• Information technology (IT): consists of all the hardware and software that a firm needs to
use to achieve its business objectives.
What is an information system?
• Information system (IS): a set of interrelated components that collect (or retrieve), process,
store and distribute information to support decision making, coordinating, and control in an
organization. May also help managers and workers analyze problems, visualize complex
subjects, and create new products.
• Information: data that have been shaped into a form that is meaningful and useful to human
beings.
• 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.
• Three activities in an information system produce the information that organizations need to
make decisions, control operations, analyze problems and create new products or services:
- Input: captures or collects raw
data from within the
organization or from its external
environment.
- Processing: converts this raw
input into a meaningful form.
- Output: transfers the processed
information to the people who
will use it or to the activities for
which it will be used.
• Information systems also require
feedback: output that is returned to
appropriate members of the
organization to help them evaluate
or correct the input stage.
• Distinction between computer and computer program and information system:
- Computers and related software programs are the technical foundation, the tools and
materials, of modern information systems.
- Computers provide the equipment for storing and processing information.
- Computer programs, or software, are sets of operating instructions that direct and
control computer processing.
, • 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.
It isn’t simply technology: the role of people and organizations
• Information systems literacy: the broader
understanding of information systems, which
encompasses an understanding of the people and
organizational dimensions of systems as well as the
technical dimensions of systems. Includes a
behavioral as well as a technical approach to
studying information systems.
• Computer literacy: focuses primarily on knowledge
of information technology.
• The field of management information systems (MIS)
tries to achieve this broader information systems
literacy. MIS deals with behavioral issues as well as
technical issues surrounding the development, use,
and impact of information systems that managers and employees in the firm use.
Dimensions of information systems
• Organizations: organizations have a structure that is composed of different levels and
specialties.
- A business firm is organized as a hierarchy, or a pyramid structure, of rising authority
and responsibility. The upper levels of the hierarchy consist of managerial, professional,
and technical employees, the lower levels consist of operational personnel.
- An organization accomplishes and coordinates work through this structured hierarchy
and through its business processes: logically related tasks and behaviors for
accomplishing work.
- Organizations’ business processes include formal rules that it has developed over a long
time for accomplishing tasks.
- Each organization has a unique culture: fundamental set of assumptions, values, and
ways of doing things, that has been accepted by most of its members.
• People: Information systems are useless without skilled people to build and maintain them
or people who can understand how to use the information in a system to achieve business
objectives.
- The job of managers it to make sense out of the many situation organizations face, make
decisions, and formulate action plans to solve organizational problems. They must also
create new products and services and even re-create the organization from time to time.
- Technology is relatively inexpensive today, but people are very expensive.
• Technology: information technology is one of many tools mangers use to cope with change
and complexity:
- Computer hardware: the physical equipment used for input, processing, and output
activities in an information system. Consists of computers of various sizes and shapes;
various input, output, and storage devices; and telecommunications devices that link
computers.
- Computer software: consists of the detailed, preprogrammed instructions that control
and coordinate the computer hardware components in an information system.
- Data management technology: consists of the software governing the organization of
data on physical storage media.
- Network and telecommunications technology: consisting of both physical devices and
software, links the various pieces of hardware and transfers data from one physical
location to another.
