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Technical Approach
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Three disciplines that contribute to the technical approach are
Computer science: concerned with establishing theories of
computability,methods of computation, and method of efficient data
storage and access
Management science: emphasizes the development of models for
decision-making and management practices
Operations research: focuses on mathematical techniques for
optimizing selected parameters of organizations such as
transportation,inventory control, and transaction costs
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Computer Science
Management
Science
operations Research
Sociology
MIS
Psychology
Political Science
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Behavioral Approach
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Growing part of the I.S. field is concerned with behavioral problems
and issues
Problems such as system utilization, implementation, and creative
design, can not be expressed with the normative model used in the
technical approach
Sociologists: focus on the impact of I.S. on groups, organizations,
and society
Political scientist investigate the political impacts and uses of I.S.
Psychologist: concerned with individual response to I.S. and
cognitive models of human reasoning
The behavioral approach concentrate on changes in attitudes,
management and organizational policy, and behavior
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Sociotechnical Systems
• The study of management information systems (MIS) began in 1970s
• To focus on computer based information systems aimed at managers
• An MIS combines the theoretical work of computer
science,management science,and operations research with a practical
orientation toward building systems and applications
• Also concerned with issues raised by sociology, economics, and
psychology
• Technology must be changed and designed in such a way so to fit
organizational and individual needs
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Widening scope of Information systems
• Interdependencies between business strategy, rules,
and procedures
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Most Common Types Used In Business
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Electronic Commerce Systems
Transaction Processing Systems (TPS)
Management Information System (MIS)
Decision Support Systems (DSS)
Artificial Intelligence System (AI)
Expert Systems
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E-Commerce
• Involves any business transaction executed
electronically b/w parties.
• Wrong Conception: e-commerce reserved mainly for
consumers visiting Web site for on-line shopping.
• Major volume is business-to-business transactions
that make purchasing easier for corporations, No
Sales TAX
• Advantages:any time shopping,ease,home delivery
• Disadvantages:credit card info,cookies,sell your info
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Transaction Process Systems
• Transaction: any business related exchange such as
payments to employees,payments to suppliers,sales
to customers
• Processing business transaction was the first
application of computers for most organizations
• An organized collection of
people,procedures,software,databases,and devices
used to record completed business transactions
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Transaction Process Systems
• One of the first business systems to be computerized
was the payroll system.
• COBOL: COmmon Business Oriented
Language
Hours Worked
Payroll transaction
Processing
Payroll
checks
Pay Rate
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TPS
• TPS represents the application of Information
concepts and Technology
to routine ,repetitive,and ordinary business
transactions
Without computers no transaction
What is critical?
Electricity! Constant and stable supply
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Workflow Systems
• A workflow system is rule-based management
software that directs,coordinates,and monitors
execution of an interrelated set of tasks arranged to
form a business process.
• Procter & Gamble implemented an expense
reporting workflow application to
enter,submit,process,and track expense reports
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Enterprise Resource Planning
Systems ERP
• A set of integrated programs capable of managing a
company’s vital business operations for an entire multisite
,global organization.
• Most ERP systems provide integrated software to support
the manufacturing and finance business functions of an
organization.
• A demand forecast is prepared that estimates customer
demand for several weeks.
• ERP system checks what is available in finished product
inventory to meet the demand.
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Enterprise Resource Planning
Systems ERP
• Any shortcoming then needed to be manufactured.
• In developing the production schedule,the ERP
system checks the raw material and packing material
inventory and determines what needs to be ordered
to meet the planned production schedule.
• Most ERP systems also have a purchasing
subsystem that orders the items required.
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Management Information Systems
(MIS)
• An organized collection of
people,procedures,software,databases,and devices
used to provide routine information to managers and
decision makers.
• The focus of an MIS is primarily on operational
efficiency.
• Marketing,production,finance,and other functional
areas are supported by MIS.
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Decision Support Systems(DSS)
• An organized collection of
people,procedures,software,databases,and devices
used to support problem-specific decision making.
• A DSS supports and assists all aspects of problemspecific decision making.
• DSS can provide assistant in solving complex
problems not supported by traditional MIS.
• Managers play an active role in development and
implementation
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MIS VS. DSS
• Helps organization
“do things right”
• Complex problems not
supported
• Provides standard reports
generated with data and
information from TPS
• Helps managers
“do the right things”
• Provide solution to
complex problems
• DSS operates from a
managerial perspective
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Artificial Intelligence
• A field in which the computer system takes on the
characteristics of human intelligence.
Artificial Intelligence
Robotics
vision systems
natural lang
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Expert systems
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Expert Systems
• A system that gives computer the ability to make
suggestions and act like an expert in a particular
field
• To Monitor Nuclear reactors,perform medical
diagnosis,design and configure information system
components
• Knowledge base:collection of data,rules,procedures
and relationships
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Virtual Reality
• The user becomes fully immersed in an
artificial,three-dimensional world completely
generated by computer
• Examples: Head mounted display, data gloves
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Information Systems In Organizations
• Technology’s impact on business is growing rapidly
• Technology has changed the nature of work and
shape of organizations
• Early computer systems did not take overall goals of
the organization
• Today,business recognize that both important
organizational concepts and processes must be
considered and supported by I.S.
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Decision Making & Problem Solving
• Decision types and approaches vary widely from
organization to organization
• Effective decision making helps an organization
realize its goals
• A plan of action(Strategy) and the overall objectives
of the organization set the stage for the decision
making process
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Decision Making As A Component Of Problem
Solving
• Problem solving is the most critical Process a
business organization undertakes
• Problem solving starts with decision making
• Three stages of decision making phase
• Intelligence , design ,choice
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Intelligence
Design
Choice
Implementation
Monitoring
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Intelligence Stage
• First stage in the decision making phase of he
problem solving process is the intelligence stage
• Potential problems are defined and opportunities are
identified
• Information is gathered that relates to the cause of
the problem
• Possible solution constraints are investigated
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Intelligence Stage
• Example:
• Intelligence phase= explore possibilities shipping
tropical fruit from a farm in Hawaii to stores in
Michigan
• Problem constraints =price,perish ability
State and Federal regulations regarding the shipment
of food products
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Design Stage
• Alternative solutions are developed
• Feasibility and implications of alternatives are
evaluated
• Example: alternative methods of
shipment,transportation times and cost
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Choice Stage
• Requires selecting a course of action
• Example: method of shipment,by Air, might be
selected
• Fruits will spoil if longer time is taken
• A number of factors influence choice
• Apparently easy act of choosing is not simple
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Implementation Stage
• Problem solving goes beyond decision making
• It include the implementation stage ,when solution
is put into effect
• Example:informing the staff ,getting the fruit to the
airport,and actually shipping the fruit to Michigan
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Monitoring Stage
• Final stage is the monitoring stage
• Decision makers evaluate the implementation of the
solution
• To determine whether the expected results were
achieved
• To modify the process in light of new information
learned
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Problem solving factors
A knowledge of these factors increases a manager’s ability to
analyze and make decision
• Complexity
• Decision objectives
• Competition
• International aspects
• Social and political actions
• Technology
• Time compression
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Complexity and decision Objectives
• Today More alternatives to consider than few years
ago
Objectives
• Organizations want to do more than merely increase
profit or reduce cost
• Example:maintain certain production
level,,minimize worker accidents,minimize impact
on the environment
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Competition
• Increased competition from companies providing
same type of services and products
• Due to new technology,improved transportation
process
• Example: early 1980s,there were few personal
computer manufacturers,today over 300 worldwide
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International Aspects
• Businesses and markets have spread from local to
national and international operations
• Most of the world is aware of international impact of
major companies such as General Motors,Sony etc
• A furniture co. in Italy,might purchase furniture
from an underdeveloped country in Africa,product
assembled in Asia and sell them in Germany
• Difference in exchange rates,economic conditions
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Social and political actions
• A city council might pass an ordinance requiring
local companies to meet certain pollution standards
• Some firms might need to install new control
equipment to meet the standard
• Others might need to reconsider their choice of
manufacturing process
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Technology
• Reductions in the cost of Information technology
and advances in its capabilities have provided
increased decision alternatives to business and
organizations
• Example:ten to fifteen years ago,a manufacturer
might have had only a few local suppliers
• Now,technology brings to manufacturer’s doorstep
hundred of suppliers throughout the world that could
provide parts or materials
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Technology
• Information technology can assist in product design
• Computer assisted design (CAD) systems can result
in superior products,reduced cost,time saving over
Manual approaches
• CAD systems include sophisticated software ,can
create two and three dimensional images
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Farmers Insurance Group
• Like all large companies Farmers Insurance Group
was having a huge amount of raw data.
• Data was spread across different computer systems
in different locations.
• Profit or loss depends on Insurance policy at what
rate?
• Competition has gotten more intense
• Traditional ways of segmenting risk aren’t good
enough at providing you competitive advantage
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• High-powered sports cars are more likely to be
involved in expensive accidents than ordinary
sedans
• Put them in a different risk category than sedans
• Actuary would test it using the computer
• One disadvantage of this old approach is that
small,but profitable,market niches may be ignored
or not priced correctly.
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Farmers Decided take help from
computer System
• Found the help through IBM,which developed a
customized software product for Farmers called
DecisionEdge
• The computer system was an advanced Decision
Support System (DSS)
• It combined raw data from seven different databases
on a staggering 35 million records
• Took twice as long as expected to covert raw data
into useful information
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• Additional wait was worth it.
• Farmers found new niches that it did not see before
DSS.
• Example: DecisionEdge helped Farmers determine
not all sports car owners are alike
• Older and had another car were less likely to be
in an expensive accident
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Information Systems In Organizations
• once this market niche was identified,Farmers could offer
that segment of the sports car market lower premium
• Farmers Insurance Group was able to use DecisionEdge to
help it find new market
niches(a situation specially suited to a person’s abilities)
resulted in millions of dollars of increased revenues
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Focused Differentiation
• Competitive strategy for developing new market
niches for specialized products or services where
business can compete in the target area better than
its competitors
• Example : foldable keyboard
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Datamining
• Analysis of large pools of data to find patterns and
rules that can be used to guide decision making and
predict future behavior.
• Example: mining data about purchases at
supermarkets might reveal that when potato chips
are purchased,soda is also purchased 65% of the
time.
• When there is a promotion,soda is purchased 85% of
time people purchase potato chips.
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Supply chain management
• Inventory is just dead weight on a firm
• When goods or staff members are underutilized ,the
firm must pay financial costs without receiving any
revenues.
• Therefore, many firms attempt to use IT to eliminate
or greatly reduce inventory
• Example:By keeping prices low and shelves well
stocked, Wal-Mart has become the leading retail
business in US.
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Assignment #1
• Do review questions 1 ,3,4,8,and 11
See next slide for Questions
• Due at the start of next class
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1: distinguish between a computer,a computer program,and
an information system.What is the difference b/w data and
information?
3: what is information systems literacy?
4: what are the organization,management,and technology
dimensions of information systems?
8:what is the relationship b/w an organization and its
information systems? How is this relationship changing
over time?
11: Describe some major changes that information systems
are bringing to organizations?
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