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Chapter 01 - Foundations of Information Systems in Business
1
Foundations of Information
Systems in Business
CHAPTER OVERVIEW
Chapter 1: Foundations of Information Systems in Business presents an overview of the five basic areas of
information systems knowledge needed by business professionals, including the conceptual system components and
major types of information systems. In addition, trends in information systems and an overview of the managerial
challenges associated with information systems are presented.
LEARNING OBJECTIVES
After reading and studying this chapter, you should be able to:
1.
Understand the concept of a system and how it relates to information systems.
2.
Explain why knowledge of information systems is important for business professionals, and identify five areas
of information systems knowledge that they need.
3.
Give examples to illustrate how the business applications of information systems can support a firm’s business
processes, managerial decision making, and strategies for competitive advantage.
4.
Provide examples of several major types of information systems from your experiences with business
organizations in the real world.
5.
Identify several challenges that a business manager might face in managing the successful and ethical
development and use of information technology in a business.
6.
Provide examples of the components of real world information systems. Illustrate that in an information system,
people use hardware, software, data, and networks as resources to perform input, processing, output, storage,
and control activities that transform data resources into information products.
7.
Demonstrate familiarity with the myriad of career opportunities in information systems.
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Chapter 01 - Foundations of Information Systems in Business
SUMMARY
• IS Framework for Business Professionals. The IS knowledge that a business manager or professional needs to
know is illustrated in Figure 1.2 and covered in this chapter and text. This knowledge includes (1) foundation
concepts: fundamental behavioral, technical, business, and managerial concepts like system components and
functions, or competitive strategies; (2) information technologies: concepts, developments, or management issues
regarding hardware, software, data management, networks, and other technologies; (3) business applications: major
uses of IT for business processes, operations, decision making, and strategic/ competitive advantage; (4)
development processes: how end users and IS specialists develop and implement business/IT solutions to problems
and opportunities arising in business; and (5) management challenges: how to manage the IS function and IT
resources effectively and ethically to achieve top performance and business value in support of the business
strategies of the enterprise.
• Business Roles of Information Systems. Information systems perform three vital roles in business firms.
Business applications of IS support an organization’s business processes and operations, business decision making,
and strategic competitive advantage. Major application categories of information systems include operations
support systems, such as transaction processing systems, process control systems, and enterprise collaboration
systems; and management support systems, such as management information systems, decision support systems,
and executive information systems. Other major categories are expert systems, knowledge management systems,
strategic information systems, and functional business systems. However, in the real world, most application
categories are combined into cross-functional information systems that provide information and support for
decision making and also performing operational information processing activities. Refer to Figures 1.7 , 1.9 , and
1.11 for summaries of the major application categories of information systems.
• System Concepts. A system is a group of interrelated components, with a clearly defined boundary, working
toward the attainment of a common goal by accepting inputs and producing outputs in an organized transformation
process. Feedback is data about the performance of a system. Control is the component that monitors and evaluates
feedback and makes any necessary adjustments to the input and processing components to ensure that proper
output is produced.
• Information System Model. An information system uses the resources of people, hardware, software, data, and
networks to perform input, processing, output, storage, and control activities that convert data resources into
information products. Data are first collected and converted to a form that is suitable for processing (input). Then
the data are manipulated and converted into information (processing), stored for future use (storage), or
communicated to their ultimate user (output) according to correct processing procedures (control).
• IS Resources and Products. Hardware resources include machines and media used in information processing.
Software resources include computerized instructions (programs) and instructions for people (procedures). People
resources include information systems specialists and users. Data resources include alphanumeric, text, image,
video, audio, and other forms of data. Network resources include communications media and network support.
Information products produced by an information system can take a variety of forms, including paper reports,
visual displays, multimedia documents, e-messages, graphics images, and audio responses.
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Foundations of Information Systems in Business
KEY TERMS AND CONCEPTS
1.
Computer-Based Information System ():
An information system that uses computer hardware and software to perform its information processing
activities.
2.
Control ():
The systems component that evaluates feedback to determine whether the system is moving toward the
achievement of its goal and then makes any necessary adjustments to the input and processing components of
the system to ensure that proper output is produced.
3.
Data ():
Facts or observations about physical phenomena or business transactions. More specifically, data are objective
measurements of the attributes (characteristics) of entities, such as people, places, things, and events.
4.
Data or Information Processing ():
The act of converting data into information. This includes both input and processing activities. Processing
includes calculating, comparing, sorting, classifying, and summarizing.
5.
Data Resources ():
Data is now thought of as a valuable raw material that should be used, maintained, and secured as such. Data
resources include not only structured information typically found in databases, but also the unstructured
information found in e-mail or other collaborative systems, audio, and video.
6.
Developing successful information system solutions ():
Business professionals are responsible for proposing new or improved systems to support their business
activities as well as managing their development. Using a systematic development process increases the
likelihood of a successful project.
7.
E-business ():
The use of Internet technologies to support business processes, electronic commerce, and collaboration within a
company and with its customers, suppliers, and other business stakeholders.
8.
E-business applications ():
Businesses today are using the Internet, corporate intranets, and inter-organizational extranets to support
business activities with suppliers, partners, customers, accounting, finance, research and development,
manufacturing, marketing, sales, and customer service.
9.
E-commerce ():
The buying and selling, marketing and servicing, and delivery and payment of products, services, and
information over the Internet, intranets, extranets, and other networks, between an inter-networked enterprise
and its prospects, customers, suppliers, and other business partners.
10. Enterprise Collaboration Systems:
The use of groupware tools and the Internet, intranets, extranets, and other computer networks to support and
enhance communication, coordination, collaboration, and resource sharing among teams and workgroups.
These systems allow the creation of "virtual" teams of people who may work together without ever meeting in
person.
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Chapter 01 - Foundations of Information Systems in Business
11. Extranet ():
A network that links selected resources of a company with its customers, suppliers, and other business partners
using internet technologies.
12. Feedback ():
Data or information concerning an information system's performance.
13. Hardware Resources ():
All physical devices and materials used in information processing. This includes not only machines, but storage
media such as disks, tape, and paper.
a.
Machines ();
Consist of all input, processing, output, networking, and storage devices including computers, keyboards,
printers, monitors, and pointing devices.
b.
Media ():
Hardware designed to hold data such as paper forms, magnetic disks, optical disks, magnetic tape, magnetic
strips, and memory "sticks".
14. Information ():
Data that have been converted into a meaningful and useful context for specific end users.
a.
Information products ():
The degree to which information is packaged into an easy to use form. Information products include
messages, reports, forms, and graphic images.
15. Information System ():
The arrangement of all the components and resources necessary to deliver information and functions to the
organization. These resources include hardware, software, and people to perform input, processing, output,
storage, and control activities that transform data resources into information products.
16. Information system activities ():
All information systems (manual or automated) share the same characteristics.
a.
Input ():
Data entry.
b.
Processing ():
Data transformation including calculating, comparing, sorting, classifying, and tabulating.
c.
Output ():
Information made available to end uses. This may take the form of messages, reports, forms, images,
sound, and video.
d.
Storage ():
The retention of information such that it can be later retrieved.
e.
Control ():
Control includes feedback regarding input, processing, output, and storage activities as well as actions
performed in response to this information.
17. Information System Model ():
The conceptual view of an information system.
18. Intranet ():
Internet-like networks and websites developed for use within an organization.
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Foundations of Information Systems in Business
19. Knowledge Workers ():
People whose primary work activities include creating, using, and distributing information.
20. Management information systems ():
These systems provide information to managers and business professionals.
21. Network resources ():
Network resources include communications media, switches, routers, transmitters, software, and other network
infrastructure.
22. People Resources ():
People are an essential component of an information system. Broadly, this resource includes IS specialists and
end users.
a.
IS specialists ():
Are people who develop and operate information systems.
b.
End users ():
Are people who use an information system or the output it produces.
23. Roles of IS in Business ():
Information systems perform three vital roles in any type of organization.
a.
Support of business processes and operations ():
Examples of supported business processes include activities such as sales transactions, inventory ordering,
and payroll processing.
b.
Support of business decision making ():
Systems can support less structured business activities such as deciding which product lines to add or
discontinue. While these types of decisions require human creativity, information systems can support
managers in this process by providing them with useful information on demand.
c.
Support of strategies for competitive advantage ():
Information systems can make available new types of products and services through which an organization
might gain a competitive advantage.
24. Software Resources ():
Software resources comprise all sets of information processing instructions. This includes not only software but
the human procedures associated with managing information systems as well.
a.
Programs ():
A set of instructions that cause a computer to perform a particular task. These tasks may include managing
the operational components of the information system, or they may directly support business operations.
b.
Procedures ():
Set of instructions used by people to complete a task.
25. System ():
A system is a group of interrelated components working together toward a common goal by accepting inputs
and producing outputs in an organized transformation process.
26. Types of Information Systems ():
Information systems are classified in order to spotlight the major roles each plays in the operations and
management of a business.
a.
Cross-functional information systems ():
Information systems that cross the boundaries of functional business areas and management levels in order
to support business processes throughout the organization.
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Chapter 01 - Foundations of Information Systems in Business
b.
Management support systems ():
Information systems that provide information and support for effective decision making by managers.
These types of systems include executive information systems, decision support systems, and management
information systems.
c.
Operations support systems ():
These systems help enable the day to day operations of an organization. They include office automation
systems, transaction processing systems, and process control systems.
d.
Functional business systems ():
Systems that focus on basic business functions such as accounting, marketing, sales, finance, and human
resource management.
e.
Transaction processing systems ():
Transaction processing systems (or TPS) are a type of operations support system. A TPS processes routine
business transactions such as sales or purchases.
f.
Process control systems ():
These systems monitor and control physical processes such as production lines, package routing, and
heating and cooling systems.
g.
Enterprise collaboration systems ():
Enterprise collaborative systems facilitate team or workgroup communications and productivity. These
include e-mail, instant messaging, message boards, digital whiteboards, wikis, and videoconferencing.
ANSWERS TO REVIEW QUIZ
Q.
A.
Key Term
Q.
A.
Key Term
1
Knowledge workers
25
People resources
2
Roles of IS in business
26
Input
3
Support of business processes and operations
27
Processing
4
Support of business decision making
28
Output
5
Support of strategies for competitive advantage
29
Storage
6
Information system
30
Control
7
Computer-based information system
31
Types of information systems
8
End users
32
Operations support systems
9
E-business applications
33
10
Electronic commerce
34
Management support systems
Cross-functional informational
systems
11
Enterprise collaboration systems
35
Intranet
12
System
36
Extranet
13
Feedback
37
E-business
14
Control
38
Functional business systems
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Chapter 01 - Foundations of Information Systems in Business
15
Data
39
16
17
18
19
20
21
Information
Information system activities
Information system model
Hardware resources
Machines
Media
40
41
42
43
44
45
Data resources
Developing successful information
system solutions
Information products
Network resources
IS specialists
Data or information processing
Process control systems
22
Software resources
46
Management information systems
23
Programs
47
Transaction processing systems
24
Procedures
48
Enterprise collaborative systems
ANSWERS TO DISCUSSION QUESTIONS
1.
How can information technology support a company’s business processes and decision making and give it
a competitive advantage? Give examples to illustrate your answer.
Support: Information technology can automate manual process such as document transmission. Instead of
writing memos or letters, employees can compose and send e-mails electronically. Information technology can
also facilitate the reengineering of entire business processes. For example, the airlines industry relies heavily on
online ticket booking. Not only does this facilitate filling seats, but it also provides them with a valuable
information about passengers which they can repackage for sale to business partners in the form of "frequent
flier" programs.
Competitive advantage: product innovations or cost savings program can provide a product or price advantage
over competitors that lasts until competitors catch up. Though the advantage may be fleeting, the boost to an
organization's image may be longer lasting.
2.
How does the use of the Internet, intranets, and extranets by companies today support their business
processes and activities?
Internet: organization can connect directly with the general public. Opportunities range from giving away
basic product information to automatically updating or patching retail software. Many businesses also conduct
retail operations online.
Intranets: organizations often use internet technologies to facilitate operations within the organization. Such
systems might include product support knowledge bases, training systems, and access to the organisation's
benefits system.
Extranet: organizations may use these same internet technologies to connect with their business partners to
facilitate supply chain management, help manage projects, manage accounts, or provide advanced technical
support.
Organizations use internet technologies to connect with both customers and suppliers. These technologies
allow customers to generate and track their own orders as well as manager their accounts. They also enable
significant supply chain automation
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Chapter 01 - Foundations of Information Systems in Business
3.
One major issue in the Real World Challenge outlined in the chapter was the lack of upgrades and new
applications undertaken ever since the company was founded and the original IT infrastructure put in
place. How does a company ever get to the place where Crescent is in the opening to this chapter? What
do you think prevented them from taking action earlier?
A. There could easily be any number of reasons for a failure to upgrade a system, or a combination of several
reasons. One could be a failure if IT management to stay on top of the current state of IT, or a lack of funds to
accomplish necessary upgrades. One major reason could easily be a lack of senior management commitment to
keeping IT current with technology in the industry, again for lack of funding, or perhaps just short-sightedness
on their part. In the early days of information systems departments, the connection to senior management was
through the head of whatever department to which IT reported. In the last 20 years the position of CIO has
developed, but many firms are still getting used to the idea of having a systems person at the “C” level, and
company-wide decision regarding IT are still made around that person rather than with his/her input.
It is also quite possible that the firm saw its requirements as well-fulfilled with the current system and felt no
need to upgrade until suddenly they were years out of date with everyone asking the same question – when are
we going to become current with the rest of the industry? This shows a lack of for sight on the part of IS/IT
management.
B. Several things may have prevented them from taking action earlier. One of course would be funding (or rather,
lack thereof). Many firms do not realize the value of their investment in IT until they are woefully out of date,
then suddenly they need to re-invest massively in IT to get back to where they should be as opposed to their
competition. Other firms invest all the time, continually updating to stay at the forefront of technology in their
industry – an expensive proposition. Most firms seem to work somewhere between these two extremes,
investing when necessary, but carefully and not extravagantly. The case as written does not give any
indications of what may have prevented C.H. from upgrading over the years, but it is evident they did not do so,
arriving at their current plight when Michalak took over IT. End-user complacency could also have contributed
– if the users were content with the way things worked and did not see any need for upgrades, then they never
brought any concerns for upgrades to management who probably thought everything was ok the way it was, so
why invest money where it was not needed? Overall, the general reason would probably be some combination
of lack of senior management commitment, lack of funds, and failure of IT management.
4.
Why do big companies still fail in their use of information technology? What should they be doing
differently?
Top Five Reasons for Success
User involvement
Top Five Reasons for Failure
Lack of user input
Executive management support
Incomplete requirements and specifications
Clear statement of requirements
Changing requirements and specifications
Proper planning
Lack of executive support
Realistic expectations
Technological incompetence
Certainly the reasons listed in the table above could explain some of the major causes of why companies fail in
their use of information technology. However, it is important to note that the field of technology is changing at
such a rapid pace that many large and successful companies are having difficulty keeping up with it. Other
ideas may include such things as a shortage of skilled employees, the major expense involved in managing and
developing systems, and a rapidly changing business regulatory environment. Another item that can cause
problems is the firm’s behavioural culture. Cultures are notoriously difficult to change and usually do not have
any logical origin, they simply have come into existence over a period of time and are accepted because
“everyone does it that way” or “that’s the way we do things here”. The only person who can insist on
organizational culture change is the top person in the firm (president/CEO/etc.) and this person must adopt the
new behaviour or nobody else will (He/She does not follow the new rules, so why should I?).
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Chapter 01 - Foundations of Information Systems in Business
5.
How can a manager demonstrate that he or she is a responsible end user of information systems? Give
several examples.
There are two sides to this answer. First, managers must make good use of information resources placed at their
disposal. Second, managers must not use their information systems irresponsibly. Student's answers may vary
depending on how they interpret this question.
Responsible use: Managers should demonstrate that they are using their information systems as intended. In
the case of e-mail, calendar, scheduling, and collaborative systems, other users would notice a manager's lack of
participation. They would find it difficult to communicate or schedule meetings with non-participating
managers. These managers would increasingly find themselves "out of the loop". Instead, managers should
incorporate these tools into their daily habits. To demonstrate appropriate use of other information systems,
managers should ensure they receive the appropriate training for these various applications. This would include
using data and analysis tools in order to make more informed business decisions. High quality decisions based
upon the information these systems provide would demonstrate that these assets are not being wasted.
Inappropriate use: As a manager or other end user of information, we must insure that we always consider the
ethical responsibilities of the use of information. Irresponsible uses:
 accessing and/or selling data for personal gain
 failing to protect data from loss or theft
 violating privacy laws or abusing community privacy expectations
6.
Refer to the Real World Solution in the chapter. Has Crescent Healthcare applied the “three steps for
the upgrading of legacy systems” outlined in the chapter? Which of those have been done in more or less
detail? Can you fill in the blanks for any that you see lacking?
The Crescent Healthcare case, as written, would seem to be a rather textbook case of doing everything correctly
for an upgrade to legacy systems. They thoroughly investigated the current system, focusing on What it should
be doing rather than How, gaining a thorough understanding of the current system. Next they went after
technologies that would provide everything the users needed while utilizing current technologies that would
provide for the technological upgrades that were needed within the system. A number of items were discovered
along the way that were not as straight-forward as had been hoped (whatever those “specific adjustments”
were). And “at the end of the day … functionality” won out, as demonstrated by the pharmacy system that was
not migrated to the cloud.
7.
What are some of the toughest management challenges in developing IT solutions to solve business
problems and meet new business opportunities?
Challenges:
 Increased competitive pressures resulting from a rapidly changing business environment. Developing large
systems has been often likened to "hitting a moving target." Projects that take a year or more to implement
may well satisfy last year's needs, but may do little to address current challenges.

Lack of familiarity with information systems development methodologies. As a result, they may make
poor decisions that have far-reaching effects.

Ever increasing customer expectations. Napster set the expectation that music should be easy to find, easy
to acquire, and free. FedEx set the expectation that a customer will know what day a package will arrive.
Wikipedia set the expectation that users can add to or correct information in articles themselves. People
with Internet access now get many services free: e-mail, calendaring, scheduling, instant messaging, news,
information, software, entertainment, and even free web space. All these experiences play into users'
expectations.
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Chapter 01 - Foundations of Information Systems in Business
8.

Managers must overcome resistance to change within their own organization. Employees quickly become
comfortable with their work, and they find changing processes stressful. Managers need to foster a work
environment where employees see change as a routine part of their job.

New IT projects must be properly aligned to solve specific, existing business problems. Failure to properly
align IT with actual business problems has been an ongoing problem in the technological world. It is
always a temptation to adopt new technologies and spend large sums of money on new technology that is
sleek and “cool” and makes the firm look as though it is on the forefront of “new tech”. But the real
question is, do these technologies actually solve any existing business problems, and do they address
anything that benefits the firm’s bottom line? To be really effective for a firm, IT must be carefully and
strategically aligned with the needs of the firm; i.e., it should solve business problems.
Why are there so many conceptual classifications of information systems? Why are they typically
integrated in the information systems found in the real world?
Conceptual classifications of information systems are designed to emphasize the many different roles of
information systems. This can be done from various points of view, such as the level of management that the
information systems serve, or the business functions they support. In practice, these roles are not always clearly
divided, and in any case, information produced by one business activity may serve as input data to another
activity. Thus it makes sense to integrate various roles into one information system.
9.
In what major ways have information systems in business changed during the last 40 years? What is one
major change you think will happen in the next 10 years? Refer to Figure 1.4 to help you answer.
History:
 Tabulation (pre 1950s)
 Data processing (1950s-1960s)
 Management reporting (1960s-1970s)
 Decision support (1970s-1980s)
 Strategic end user support (1980s-1990s)
 Enterprise and global internetworking (1990s-2000s)
 eBusiness (2000s-2010s)
 Social networking (2010s-current)
Future:
 User authentication
 Virtual machines
 Cloud computing
 Solid state drives
 Overhaul of computing legislation
 Integration of video, audio, images, GPS, networks into entirely new products and services.
 Biometric computing
 Monitoring and control systems embedded into the human body (for example, insulin injectors, ID chips)
 Global Collaboration
 Mobile Computing, moving out of the office and working from wherever the employee is at the moment
 Personal Computing devices – smaller, more powerful, portable (all-in-one phones/computers/network
access)
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Chapter 01 - Foundations of Information Systems in Business
10. Refer to the real world example about responsibility and accountability for project failures in the
chapter. Are these IT projects, or business projects with a significant IT component? Who should be
responsible for ensuring their success? Explain.
(the work below has some application to the answer: re-work)
IT Projects
A few projects might be considered solely IT projects. For example, a server upgrade involves only IT people.
Any resulting failure will almost always trace back to IT. Here's another way of looking at this – if I take my
car in to a garage for repairs, is it my fault if the mechanic reassembles the transmission incorrectly? My
involvement is limited only to ensuring labor hours and work time do not significantly exceed estimates.
Business Projects
In general, IT departments undertake work at the behest of business managers. Such projects require their
participation to succeed. For example, IT people aren't as likely to understand the intricacies of various office
operations and rely almost entirely on feedback from the organization's managers. Compare this with buying a
new car. It is not sufficient for a new car buyer to establish color and price requirements. For a car buyer to be
satisfied with their purchase, they must participate in product research, visit some showrooms, and test drive a
few models.
Failure:
Failure is never an orphan. Failure can come from many sources.
Managers
 do not fully understand their own business processes
 overestimate the quality of legacy data
 overestimate employee's willingness to change
 accept vendor's time & cost estimates without sufficient skepticism
 fail to appreciate the risks associated with customization
 disrupt regular business with too many changes at once
Technology:
 oversold
 implemented by inexperienced technologists
Responsibility
At best, IT managers can only facilitate projects. In most cases, they do not have the all around expertise
necessary to manage a project entirely on their own. As a result, it's important for IT managers to establish
roles and responsibilities across the entire project and ensure each team member satisfactorily completes their
tasks in a timely manner. The project manager should also set checkpoints to assess progress and communicate
with key stakeholders. Ultimately, the project's sponsor must have the authority to provide the required
resources and be held accountable for a project's final outcome. IT managers and even CIO's rarely have this
level of authority.
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Chapter 01 - Foundations of Information Systems in Business
ANSWERS TO ANALYSIS EXERCISES
1. Understanding the Information System
Solutions:
Students will more easily grasp advanced concepts once they learn to think in terms of the basic information systems
structures. This exercise takes a familiar system and breaks it down into an information system's components. This
exercise makes an excellent in-class discussion topic where students can expand each other's ideas. Consider
substituting any common information system in place of a library. Alternative examples might include video rental
stores, class registrations systems, and voter registration systems. The Library of Congress is one place to start a
search for a great many topics. This question will introduce the student to some of the information available online
at this institution.
A. A library is an information system.
a)
Input
A library's inputs consist of the items it receives for its collection. These items may consist of books,
periodicals, maps, microfiche, DVDs, CDs, and many others.
b)
Processing
A library's main processes revolve around checking out and checking in items from its collection.
Additional processes include adding new items into the collection, purging dated, duplicate, or damaged
items from the collection, photocopying or reproducing materials, facilitating inter-library loans, sending
overdue notices, assisting patrons, and repairing damaged items.
c)
Output
A library's outputs consist of any information that leaves the library. This may take the form of item loans,
photocopies, and even hand-written notes.
d)
Storage
A library's storage systems include shelves for books, stacks for periodicals, file drawers for microfiche,
and racks for CD's and DVD's.
e)
Control
A library's control systems include periodic inventories, anti-theft devices, and security cameras.
f)
Feedback
A library's feedback systems include circulation, patronage, and loss statistics. Librarians use this
information to help identify popular items, plan staffing levels, and develop strategies to reduce loss. In
short, librarians use this information to help the library run more effectively and efficiently.
B. The URL for the Library of Congress is http://www.loc.gov and the home page shows nine types of data (the
various collections) that can be accessed from that homepage.
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Chapter 01 - Foundations of Information Systems in Business
2. IT Careers
Solutions:
What skills are required to be successful in the field of Information Systems? These skills change over time as new
technologies appear, and as mature technologies become mainstream. Over time, many of these skills are learned
and mastered earlier in life as society in general accepts these skills as general knowledge.
Are You Ready?
If you are looking for a job in information technology, it helps to know what's hot. Read the CIO article IT
Graduates Not 'Well-Trained, Ready-to-Go' (http://bit.ly/h9GAw7), and answer the questions below.
Questions:
a)
What are the four skills from higher-education institutions in demand?
b)
For each skill above, list the associated course numbers and names offered by your college or university.
Use bold italics to denote courses required for all business majors; use bold to denote courses required for
all information technology majors.
c)
Are the required courses sufficient to give you the competitive edge you need (given your major)? Explain.
d)
List three required general education or "core curriculum" courses you believe provide you with the least
value in the job market. Justify your answers.
Answers:
a)
Programming, database, analysis & architecture, technical problem solving
b)
Answers will vary per college/university. Analysis, IT architecture, and database skills are often each
served by only a single, three-hour course. Problem solving and technical skills classes might be
represented by a cap-stone, real-world project-oriented class.
c)
The answer should be: "probably not", though student's perceptions may vary. Most students are simply
not aware of how much information will flow through their hands and how valuable this information can be
if they know how to manipulate it properly.
d)
This list should not contain, English, communications, math, or foreign language courses.
3.
Skydive Chicago: Efficiency and Feedback
a) How can this information system benefit the skydiving student?
Benefits:
 Faster learning – students see what they are doing right and wrong
 Improved safety – fewer mistakes results in greater safety
 "Free" video souvenir – students can make and keep copies of their videos
b) How can this information system benefit Skydive Chicago?
Benefits:
 Marketing – student videos make great promotional tools
 Safety – students learn faster and make fewer mistakes
 Reduced labor – instructors don't have to spend as much time with students
 Instructor feedback – instructors can see the results of their training efforts
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Chapter 01 - Foundations of Information Systems in Business
c)
4.
Draw the information systems model (Figure 1.19, the information system model). Fill in your diagram
with people, hardware, software, etc. information from this exercise.
Diagram Element
Detail
People resources
Student / jumpmaster
Software resources
Record, play, and copy video.
Hardware resources
Video camera, VCR, DVD, VHS tape
Network resources
VCR and camera cables
Data resources
Video
Input
Video of jump
Process
View, copy video
Output
Copy to student, copy to library
Storage
DVD/VHS tape video library
Control
Management policy, training room library access
Are Textbooks History?
Solutions:
Many students are familiar with both Google and Wikipedia. This exercise will help bring the remaining students
up to speed and enable thoughtful classroom discussion. It will also increase student's exposure to this chapter's
vocabulary.
a)
Go to http://www.google.com and use the search box to look up "End-user." Were any of Google's first five
search results useful with respect to this course?
At the time of this writing, Google returned articles featuring the words "end user." However, only the
tenth article listed contained a useful definition or description of an "end user."
b)
Go to http://www.wikipedia.com/ and use the search box to look up "Knowledge worker." Compare
Wikipedia's article to the information provided within this textbook. Which source did you find easiest to
use? What advantages did Wikipedia provide? What advantages did this textbook provide?
Textbooks can be used anywhere and do not require additional hardware, a network connection, or
keyboarding skills. On the other hand, a single computer could store or access any textbooks, thereby
eliminating heavy book bags. At the time of this writing, Wikipedia's end-user article wasn't informationsystems specific. However, it included a link to an information systems-specific article. This article
presented the end-user topic from a computer science rather than business context.
c)
Between Google, Wikipedia, and this textbook, which source provides the most useful information about
"Intranets"? Why?
Google users must first sift through topic-related articles to find information they need. Considering the
overall size of the Internet, Google does an excellent job presenting high-quality information. However,
users frequently find themselves wading through numerous irrelevant links. Wikipedia, too, rates highly in
the quality of its content and possesses the added benefit of maintaining information in an encyclopedic
manner. However, neither Google nor Wikipedia typically present information in a context appropriate for
university students majoring in a business discipline.
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Chapter 01 - Foundations of Information Systems in Business
5.
Disaster Recovery
Note: the answers to these questions require a fair amount of commons sense. This exercise may make an
excellent in-class discussion topic. Consider asking students if they have ever "lost" important work. Ask them
to elaborate on the circumstances. Stories of lost files abound. Students should get into good data management
practices early and maintain them throughout their careers. This exercise stimulates thinking and may result in
improved practices. It also supports a "no excuses" policy toward future class work. "My computer crashed" is
not a valid excuse for failing to turn in work.
1) Failing to frequently save work in progress
2) Failing to make a backup-copy
3) Storing original and backup copies in the same location
a) How might this mistake result in data loss?
b) What procedures could you follow to minimize this risk?
Answers:
1 a. The user might forget to save his or her work before exiting the application. Power might go out.
1 b. Make a habit of frequently saving work. Enable each application's auto-save feature. Learn the "shortcut"
keystrokes that cause an application to save your work. When using a desktop machine, install an
uninterrupted power supply that provides at least five minutes worth of power in the event of a power
outage. Laptop computers have this capability built in.
2 a. The storage media might become lost or damaged. The user may accidentally overwrite or delete their
work file.
2 b. Make a habit of frequently backing up work. Always start new edits using a copy of the original file
instead of directly onto the original file. Use backup scheduling software included with most operating
systems to automate daily backups.
3 a. Backpacks and briefcases may become lost or stolen. Work areas may be destroyed or rendered
inaccessible by fire, flood, or other calamity.
3 b. Make a habit of storing backups separately. For example use a key-ring thumb drive to store backups and
keep the key ring apart from the computer containing the original copy. Use a storage device on a
computer network in combination with removable media. Use a file server if available or even e-mail the
file to yourself. E-mailing will place a copy of your work on your e-mail server until you retrieve it.
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Chapter 01 - Foundations of Information Systems in Business
ANSWERS TO REAL WORLD CHALLENGE/SOLUTION
Real World Challenge
1. Why does Crescent Healthcare need to replace its current technologies? The company has very likely
invested huge sums in its core applications over time, they seem to work as expected, and people know how
to use them, even if they have some quirks. Is it worth starting all over again?
If Crescent Healthcare’s systems are about 20 years old and have barely been touched in that time, then those
systems are hopelessly out of date, even if they are doing what they were originally intended to do. One thing
we know about the business environment: it is always changing! Computer technology is also changing at an
extremely fast pace. C.H needs to be kept up to date on what is happening with its customers faster than the
current system can update those files. The C.H. employees, caregivers, and partners need to be kept up to date
by the minute on changes that may affect the patients. There are also changing legal and political ramifications
to be considered. The laws concerning healthcare have changed significantly over the last 20 years, and
healthcare law is constantly evolving today. The current systems likely have not been updated to keep abreast
those legal structures. Customer expectations should also be taken into account – what do customers expect
when dealing with a healthcare provider? What information should be available to the caregivers and to the
patients, and how fast should it be available? “Perception” is extremely important when dealing with customers,
and their perception of the product has a lot to do with how current the C.H. technology is.
Why replace current technologies?
 its current technologies are 20 years old and out of date
 C.H. employees, caregivers, and partners need fast access to all patient data
 the legal environment has changed significantly
 to meet customer expectations
Where is the value of their systems?
None of this can happen with the current systems and technologies at C.H. If C.H. wants to provide first class
customer care and be at the forefront of the industry, then it needs to update its systems.
2. What are some of the alternatives that Michalak has for achieving these objectives? That is, in which ways
could the revamping of existing applications be accomplished? What are the advantages and
disadvantages of each?
Alternatives
 in-house custom programming
Advantages
o the work can be accomplished by in-house systems staff
o they can customize everything to their own specifications
Disadvantages
o cost to hiring, training, and paying for staff
o maintenance and support costs
o lengthy development time

purchase a pre-built/pre-packaged system
Advantages
o faster to acquire and implement
o lower cost
Disadvantages
o may require customization that takes time and money and adds to long term maintenance
complexity
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Chapter 01 - Foundations of Information Systems in Business

SaaS / Cloud
Advantages
o fastest to implement (no hardware to install and configure)
o typically less expensive than implementing in-house solutions
o the Cloud could provide for their requirements at a cost- and infrastructure-efficient basis. This
would allow C.H. to utilize providers who specialize in the specific areas where their needs exist
and allow competition to dictate pricing. A Cloud-based solution would also allow C.H. to do as
much in-house as they wish, and outsource the rest. Programming, for instance, could be
accomplished in-house, and then the infrastructure could be outsourced to the cloud.

Outsourcing: The entire work could be contracted to an outside provider.
Advantages
o hiring a contractor who specializes in this area saves time, and places success of and the
responsibility for the system upon the outsourcing agent
o responsibility for hiring, training, and success of the new systems entirely upon the contractor
Disadvantages
o this may be very expensive – C.H. needs to compare the financial costs in-house development
against the costs of outsourcing
o there is also the ongoing relationship with the provider to be considered and managed
o over the next few years the provider may increase costs significantly or provide less than optimal
service
o the costs of switching to another provider or moving development in-house must be considered.
3. Beyond replacing the current systems with more modern ones, what other functionality would you add to
Crescent’s IT infrastructure? In what ways would you make the new systems different from the current
ones?
A thorough needs assessment should be undertaken at Crescent Healthcare. What are the actual needs and
desires of the workers and caregivers to do their jobs, or to do them better? What are the costs of these
improvements? Once the necessary improvements are adopted, then the hardware and infrastructure to support
these changes can be addressed.
Simply moving to graphical user interfaces will make access easier for the users and provide a considerable
increase in customer perception/satisfaction as they will see a modern system, not one that appears to be 20 years
old.
At a minimum, C.H. should move to a networked enterprise system where all the necessary customer
information is available both at the C.H. offices, in the field (to the caregivers), and to the patients as they access
the system. This system should also update patient files from the field in a timely manner. The new system also
should have access to the latest information regarding medical treatments, pharmaceuticals, and legal structures
regarding these issues.
Real World Solution
1. Brett Michalak sees the efforts undertaken by Crescent Healthcare as providing the company with a
competitive advantage over others in its industry. Can you provide three examples of how these
technologies may provide them with a competitive advantage?
There can be many different ways to create competitive advantage with the efforts at C.H., such as:
A. Engaging and Retaining employees
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Chapter 01 - Foundations of Information Systems in Business
1. Engaged employees deliver outstanding patient experience. Customers/patients talk about their
experiences to other patents and people in general. This creates a competitive advantage in gaining new
patients.
2. And engaging employees creates a hiring competitive advantage. Employees want to work for a firm
that is known for engaging and retaining their talent. And retaining the best employees in the field
provides a great competitive advantage over the competition.
B. Immediate feedback – By providing direct, immediate, onsite access to diagnostic, treatment, and pharmaceutical
information C.H. provides patients with services that may not be offered by their competition. This is an
outstanding way to create competitive advantage: give the patients what they want – immediate feedback to their
questions and concerns about their health.
C. These updated systems should provide a mechanism to better organize the massive amounts of customer data
inherent in this industry. Organizing so that the important data is readily available, particularly onsite with the
patient, will provide a competitive advantage over other firms that do not have this ability readily available.
D. Security of patient data is a very important issue from both a patient’s own perspective and from a political/legal
perspective. The new systems should be much more up to date with respect to security which would also offer a
competitive advantage over rival firms that had not yet addressed the issue to the level that C.H. could with the
new technology.
2. Based on your experience with the healthcare industry, what other projects do you see a company like
Crescent Healthcare undertaking in the future? Does their new infrastructure position them well for
those future initiatives? Why or why not?
Given that Crescent Healthcare is upgrading its technology and infrastructure to current industry standards, and
that through the cloud it should stay abreast changes as they appear, C.H. should be positioned to pursue any new
technology that appears in the field of healthcare. New imaging technologies, new diagnostic technologies,
customer service, in-home or in-office procedures, all these should be available with the new technologies and
infrastructure adopted by Crescent Healthcare.
Utilizing the cloud to provide infrastructure should allow C.H. to stay abreast of any new technologies that
appear almost as fast as they become available. The cloud provides an advantage for service users (such as C.H.)
because of the numbers of providers making their series available through the cloud. Utilizing these services
should enable Crescent Healthcare to stay on top of their market by providing world-class products, services, and
customer service to their patients, caregivers, and business partners.
ANSWERS TO REAL WORLD CASES
RWC 1: eCourier, Cablecom, and Bryan Cave
Case Study Questions
1.
How do information technologies contribute to the business success of the companies depicted in the
case? Provide an example from each company explaining how the technology implemented led to
improved performance.
These technologies enable fact based decision making.
eCourier: uses GPS enabled hand-held devices, online booking, and customer data analysis to increase
efficiency, enable scalability, and improve customer service.
Cablecom: uses custom data mining tools and surveys to improve customer service and retention.
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Chapter 01 - Foundations of Information Systems in Business
Bryan Cave: uses analysis tools to evaluate their fees. These tools enable flexible fee structures, equal
opportunity compliance, and staffing optimization.
2.
In the case of law firm Bryan Cave discussed above, the use of BI technology to improve the availability,
access, and presentation of existing information allowed them to provide tailored and innovative services
to their customers. What other professions could benefit from a similar use of these technologies, and
how? Develop two different possibilities.
Students should consider other hourly billing based professional services industries. Examples include:




consulting firms
engineering firms
architecture firms
software development companies
Student's examples might include scheduling an optimal mix of personnel to provide the appropriate level of
supervision, client interaction, expertise, and inexpensive labor. Emergency room staffing would make an
excellent example where the chief resident supervises all services while residents, interns, and nurses at various
levels provide the majority of the labor.
Students might also suggest using the tools described in the Bryan Cave section to estimate project costs given
the work currently in the "pipeline". This would enable firms to reject work which might disrupt the current
work schedule or make more appropriate bids on more suitable projects.
3.
Cablecom developed a prediction model to better identify those customers at risk of switching to other
company in the near future. In addition to those noted in the case, what other actions could be taken if
that information were available? Give some examples of these. Would you consider letting some
customers leave anyway? Why?
In addition to identifying at-risk customers, these tools might also help identify problem products, services,
personnel, and processes. Once identified, Cablecom could make the appropriate adjustments and thereby
reduce the number of complaints.
For example, if customers on a particular service route are more prone to complain, managers may wish to
review, retrain, or terminate employees responsible for that route.
BI systems identify chronic complainers. These customers serve not only as a material financial drain, but they
also sap the energy of valuable employees. So yes, an organization could benefit from identifying these trouble
customers and let them go. On the other hand, managers must be careful not to shift blame onto customers
when the fault really lies elsewhere. Doing so not only alienates valuable customers, but it also delays
identifying and correcting the true problem.
Real World Activities
1.
Use the Internet to research the latest offerings in business intelligence technologies and their uses by
companies. What differences can you find with those reviewed in the case? Prepare a report to
summarize your findings and highlight new and innovative uses of these technologies.
Students should search on "Business Intelligence Software" and "business intelligence case studies".
2.
Why do some companies in a given industry, like eCourier above, adopt and deploy innovative
technologies while others in the same line of business do not? Break into small groups with your
classmates to discuss what characteristics of companies could influence their decision to innovate with the
use of information technologies.
Characteristics:
 Technical resources
 Human resources
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Chapter 01 - Foundations of Information Systems in Business



Capital resources
Risk tolerance
Reward structures




Organizational culture
Litigation risk
Competitive threats
Customer demands
RWC 2: The New York Times and Boston Scientific
Case Study Questions
1.
As stated in the case, the New York Times chose to deploy their innovation support group as a shared
service across business units. What do you think this means? What are the advantages of choosing this
approach? Are there any disadvantages?
Shared service
A shared service means that it's a resource available to all the organization's business units. Typically, shared
services operate as a "profit center". This means they generate internal charges (bills) for their work. The
charge-back system helps IT to quantitatively justify its existence to the organization.
Advantages
 Pooled expertise
 Shared overhead costs
 Easier to enforce software, hardware, technology, process, and policy standards across an organization
 Easier to share best practices across an organization
Disadvantages
 Creates an extra layer of management between IT and end-users which may result in some loss of
responsiveness or accountability to individual business units
 Reduced flexibility
2.
Boston Scientific faced the challenge of balancing openness and sharing with security and the need for
restricting access to information. How did the use of technology allow the company to achieve both
objectives at the same time? What kind of cultural changes were required for this to be possible? Are
these more important than the technology-related issues? Develop a few examples to justify your answer.
Technology
Boston Scientific accomplished its objective by implementing an automated workflow application to help them
manage information access.
Cultural changes
Boston Scientific's managers had to eliminate their "information silo" mentality and perceive the value in
sharing their information in a controlled and accountable fashion. Its managers also had to learn the new
technology and incorporate it into their daily processes.
Importance
Since a project will fail without both cultural and technology changes, neither one is more important.
Sample examples
Some cultures operate under a strict social hierarchy. Enabling workers to participate in quality improvement
initiatives by providing them with production data and analysis tools would run counter to this culture. Unless
the implementation team manages to overcome this cultural barrier, managers would resist sharing information
or simply deny their employees access to the system.
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Chapter 01 - Foundations of Information Systems in Business
3.
The video rental map developed by the New York Times and Netflix graphically displays movie
popularity across neighborhoods from major US cities. How would Netflix use this information to
improve their business? Could other companies also take advantage of these data? How? Provide some
examples.
Possible business improvements
Netflix could use this data to identify affinities between movies and ensure that its regional distribution centers
are appropriately stocked to meet anticipated demand.
External use
Netflix might consider selling its data to consumer trend-tracking organizations. Netflix need not divulge
individual customer data but instead group movie rental data by postal code. Postal codes would give marketers
the ability to tie Netflix' data in with data from other marketing systems to help create more useful regional,
demographic profiles.
Real World Activities
1.
The newspaper industry has been facing serious challenges to its viability ever since the Internet made
news available online. In addition to those initiatives described in the case, how are the New York Times
and other leading newspapers coping with these challenges? What do you think the industry will look like
5 or 10 years from now? Go online to research these issues and prepare a report to share your findings.
Note 1: does the current generation even read traditional newspapers? 1
Note 2: early science fiction writers anticipated newspaper facsimiles printing out in each subscriber's home.
Current state
Traditional newspapers have expanded to the Internet. The Wall Street Journal, USA Today, and The
Economist, among others, employ a subscription model for their online services. Others, like The New York
Times, rely on revenue generated through online advertising.
News aggregators such as news.google.com do a good job organizing news stories by subject and region,
though not by date or political inclination.
Search terms
"future of newspapers"
Future
Users will be able to indicate their current "state" or "mode" or "status" and receive news appropriate for the
moment. For example, the "newspaper" software would present top local, regional, national, and international
headlines before work. During working hours, the user might see only new stories in various industry or
technical journals. After hours, weekends, and holidays, the news stories would focus on leisure activities. The
software will base its decision on explicit instructions (show me…, don't show me…), past browsing habits, and
the browsing habits of various affinity groups related to the individual and their current "state". The software
will adapt over time and adjust to changing preferences. It will also accept user input regarding an article's
quality. This will further "instruct" the software as well as provide the newspaper with real-time feedback. The
software will also likely consider the user's physical location and connection device when making story
recommendations. Newspapers will not charge for these features – they'll provide them simply increase
readerships. Some newspapers may experiment with a "commercial free" version for a fee. However, if
commercials become too intrusive, news providers would run the risk that users would switch to another
service.
1
http://www.arcamax.com/doonesbury/s-746877-698187
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Chapter 01 - Foundations of Information Systems in Business
It's distinctly possible that services providers will have so much information about a user – including real-time
physical location and purchasing desires, that advertising revenue will increase. For example, how much would
a local restaurant pay to reach a user located a block away who has expressed interest in finding a nice place to
eat within the next hour? The user gets a list, perhaps a discount offer, reservations, and GPS directions only to
those places within his or her vicinity that match his or her dining preferences. Just click here…
2.
Go online and search the Internet for other examples of companies using technology to help them
innovate and develop new products or services. Break into small groups with your classmates to share
your findings and discuss any trends or patterns you see in current uses of technology in this regard.
Examples abound within this text and online. One example worth following closely is Google's Android
operating system and its application in smart phones and other devices. This product is a relatively new and
direct challenge to Windows CE, iOS, Unix, and others.
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