FUNDATIONS OF INFORMATION SYSTEMS PART3

9 Perspectives on Information Systems

Perspectives on Information Systems are discussed under the views of Technological based, Computer-Based Information System (CBIS) based and Business based Perspectives. The brief descriptions of each perspective are discussed below.

9.1 Technology perspective: A set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization. Information System Stores, retrieves, transforms, and disseminates information in an organization.

9.2 Computer-Based Information Systems (CBIS)

Earlier days there was a usage of manual information system which essentially depend on the human skills and intellectual capabilities of individuals. Unlike manual information system, Computer-Based Information System has fixed definitions of data and procedures. Computer-Based Information System (CBIS) rely on computer hardware and software and performs processing operations as defined by the pre established set of procedures, and sequences of instructions and thus disseminate the information to the organization or to end users.

9.3 Business perspectives of Information Systems

Following points are worth to note under the view of Business Perspective on Information Systems.

Information Systems based on information technology require significant investments but provides thus organizational and management changes and innovations to meet the contemporary business needs and hence to meet the changing business environment. Information Systems create value primarily by changing business processes and management decision making behavior and process. Businesses organizations invest in Information Systems in order to create value and hence to increase profitability. Information systems are more than just technology. Information systems are an organizational and management solution to business challenges that arise from the business environment. Major Business Functions Rely on Information Systems are Sales and marketing, Manufacturing, Finance, Accounting, and Human resources.

9.4 The Business Information Value Chain

The figure 1.20 shows the Business Information Value Chain (BVIC). It may be noted that from the business 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 firms’ profitability. As shown in figure, raw information is systematically acquired and then transformed through various stages of business process and management functions so that value shall be added to that information.

The Business Information Value Chain

Figure 1.20 Business Information Value Chain (BVIC).

10 Dimensions of Information Systems

Dimensions of Information Systems are broadly considered as

1. Organizations

2. Managers

3. Technology

It is need to understand and balance these dimensions of information systems in order to create business value.

10.1 Organisation

The key elements of an organization are its people, structure, business processes, politics, and culture. An organization coordinates work through a structured hierarchy & formal standard operating procedures. Managerial, professional, and technical employees form the upper levels of the organization's hierarchy while lower levels consist of operational personnel. Information systems serve each of these levels. Scientists and knowledge workers often work with middle management and lower levels with operational personnel. Figure 1.21 shows three principal levels of manager hierarchically situated in a typical organization.

Business organization generally has hierarchies consisting of three principal levels:

1. Senior management,

2. Middle management, and

3. Operational management.

Figure 1.21 shows three principal levels of management in an organization.

Operational level people make daily, routine and programmed decisions which do not significantly affect the organizations strategic growth, while middle level management people will take tactical decisions and top level personnel shall take strategic decisions which will affect the organization’s performance in the long range. Table 1.3 shows some examples of three kinds levels and associated objectives and decisions. Table 1.4 shows some examples of different functions of the organizations and associated Operations, Tactics, Strategy Decisions.

Table 1.3. Examples of three levels and associated decisions.

Decision Level	Description	Example	Type of Information
Strategic	Competitive advantage, become a market leader. Long-term outlook.	New product that will change the industry.	External events, rivals, sales, costs quality, trends.
Tactical	Improving operations without restructuring the company.	New tools to cut costs or improve efficiency.	Expenses, schedules, sales, models, forecasts.
Operations	Day-to-day actions to keep the company functioning.	Scheduling employees, ordering supplies.	Transactions, accounting, human resource management, inventory.

Table 1.4 Examples of functions and associated Operations, Tactics, Strategy Decisions.

Sector	Operations	Tactics	Strategy
Production	• Machine settings • Worker schedules • Maintenance sch.	• Rearrange work area • Schedule new products • Change inventory method	• New factory • New products • New industry
Accounting	• Categorize assets • Assign expenses • Produce reports	• Inventory valuation • Depreciation method • Finance short/long term	• New A/C system • Debt vs. equity • International taxes
Marketing	• Reward salespeople • Survey customers • Monitor promotions	• Determine pricing • Promotional campaigns • Select marketing media	• Monitor competitors • New products • New markets

Senior management makes long-range strategic decisions and ensures the firm's financial performance. Middle management carries out the plans of senior management and operational management monitors the firm's daily activities. Knowledge workers such as engineers and scientists design products and create and distribute new knowledge for the organization. Data workers such as secretaries process the organization's paperwork. Production or service workers produce the products or services.

Experts are employed for the major business functions: the specialized tasks performed by organizations, which consist of sales and marketing, manufacturing and production, finance and accounting, and human resources.

An organization coordinates work through its hierarchy and business processes. These processes may be documented and formal. Each organization has a unique culture, or fundamental set of assumptions, values, and ways of doing things, that are accepted by most of its members. Part of an organization's culture can be found in its information systems. For example, UPS's organizational focus on customer service can be found in the package tracking system available to customers.

Information system may also reflect the organizational politics or conflicts that result from differing views and opinions in an organization. Information systems are also a key component in the ability of management to make sense of the challenges facing a company and in management's ability to create new products and services. Information technology is one of the tools managers use to cope with changes.

10.2 The Management Dimension of Information Systems

The Management Dimension of Information Systems is viewed manager’s as mentioned below.

Managers are:

1. Sense makers

2. Decision makers

3. Planners

4. Innovators of new processes

5. Leaders: set agendas

10.3 The Technology Dimension of Info Systems

The Technology Dimension of Info Systems considers Information technology is one of the tools managers use to cope with change. The resources and its roles of information system is described briefly below.

• Hardware: Physical equipment

• Software: Detailed preprogrammed instructions

• Storage: Physical media for storing data and the software

• Communications technology: Transfers data from one physical location to another

• Networks: Links computers to share data or resources

11 Functions of an Information System

1. An information system contains information about an organization and its surrounding environment. Three basic activities—input, processing, and output—produce the information that organizations need.

2. Feedback is returned to appropriate people or activities in the organization to evaluate and refine the input.

3. Environmental factors, such as customers, suppliers, competitors, stockholders, and regulatory agencies, interact with the organization and its information systems.

4. Functions of an Information System is presented in figure 1.22

Figure 1.22 Functions of an Information System

12 Information systems to achieve strategic business objectives:

Business firms invest heavily in information systems to achieve six strategic business objectives:

1. Operational excellence: Efficiency, productivity, and improved changes in business practices and management behavior. Eg. Wall-Mart.

2. New products, services, and business models: A business model describes how a company produces, delivers, and sells a product or service to create wealth. Information systems and technologies create opportunities for products, services, and new ways to engage in business. E.g. iPod, iTunes music Service, and the iPhone.

3. Customer and supplier intimacy: Improved communication with and service to customer’s raises revenues and improved communication with suppliers lowers costs (Hotel).

4. Improved decision making: Without accurate and timely information, business managers must make decisions based on forecasts, best guesses, and luck, a process that results in over and under-production of goods, raising costs, and the loss of customers.

5. Competitive advantage: Implementing effective and efficient information systems can allow a company to charge less for superior products, adding up to higher sales and profits than their competitors (Toyota).

6. Survival: Information systems can also be a necessity of doing business. A necessity may be driven by industry-level changes, as in the implementation of ATMs in the retail banking industry. A necessity may also be driven by governmental regulations, such as central or state statutes requiring a business to retain data and report specific information.

13 Information technology and Internet

Information technology is one of the many tools used by management to cope with change. A firm's information technology (IT) infrastructure is a technology platform or foundation on which a firm can build its information systems.

The Internet is the world's largest and most widely used network. The Internet is a global network that uses universal technology standards to connect many private and public networks. The universal standards and technologies used in the Internet are also used in systems and networks within the firm.

Intranets are internal corporate networks based on Internet technology, and extranets are corporate networks extended to authorized users outside of the firm.

Recommended Books

1. Management Information Systems”, Kenneth J Laudon, Jane P. Laudon, Pearson/PHI,10/e,

2. “Management Information Systems”, James A. O’ Brien, Tata McGraw Hill, 7th Edition, 2007.

3. “Management Information Systems”, W. S. Jawadekar, Tata McGraw Hill Edition, 3/e, 2007

Reference Books

1. “Management Information Systems”, S.Sadagopan, PHI, 1/e, 2005.

2. “Management Information Systems”, Effy Oz, Thomson Course Technology, 3/e, 2003

3. Corporate Information Strategy and Management”, Lynda M AppleGate, Robert D Austin et al, Tata McGraw Hill, 7th Edition.