What

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Whats Happening?!
Google is offering free e-mail.
Dow Jones is dropping ATT, International Paper
and Kodak from its industrial average and is
adding AIG, Verizon Communications and Pfizer.
Strong manufacturing industry expansion in March.
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ISM Toastmasters

• The brain starts working the moment you
• are born and never stops until you stand up
• and speak in public.

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Student Presentations
Chapter 1 Summary Piper Magallanes Chapter 2
Introduction Ben Alessio Chapter 2 Summary
Hannah Moreno Chapter 3 Introduction Jonathan
Perez Chapter 3 Summary Lee-Ana Hardy Chapter
13 Introduction Sean Freebairn Chapter 13
Summary Stephen Legeny Chapter 14 Introduction
Stacey Wooley Chapter 14 Summary Guisselle
Wells-Garcia
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Student Presentations
Chapter 4 Introduction Cole Macy Chapter 4
Summary Christopher Moon Chapter 5 Introduction
Alexander Steinhaus Chapter 5 Summary -- Sara
Shin
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Think About

• Enthusiasmdemonstrating a positive attitude and
  interest in the topic through your voice and
  facial expression.
• Eye Contactmaintain eye contact to increase
  credibility, gain audience interest and get
  nonverbal feedback.
• Clarityspeak clearly and use language that is
  appropriate for the audience.

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Think About

• Body Languagegood posture and movement convey
  self-confidence, professionalism and credibility.
• Gesturesneed to be natural and non-repetitive
  and used to emphasize points to help keep
  audience attention.

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Business Letter Format
Joe Student April 1, 2004 College 8, Room
228 University of California Santa Cruz, Calif.
95060 Jack D. Callon Baskin School of
Engineering University of California Santa Cruz,
Calif. 95060 Dear Mr. Callon Very truly
yours, (4 spaces) Joe Student
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Business Analysis Paper Companies
Fast Food Industry McDonalds Manufacturing
Companies Harley-Davidson Corp.
Whirlpool Corp. Salty Snack Food Industry
Frito-Lay Retail Industry Home Depot
Costco Wal-Mart Stores
Airline Industry Southwest Airlines Air
Express Industry Federal Express
Brokerage Industry Charles Schwab
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Chapter 1 Introduction

• Foundations
• of Information Systems
• in Business

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Why Information Systems Management?

• A major factor for most business organizations.
• Management of information is a key to success in
  (practically) all businesses in
• the 21st century.

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Topics of Discussion

• A framework of major Information Systems
  knowledge (and the structure of the textbook).
• What is a system and its function?
• Information Systems roles within a business.
• Information System resources.
• Major categories of Information Systems.
• Developing Information System solutions.

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(No Transcript)
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What is a System and its Functions

• 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.
• Importance of feedback and control.

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Information System Resources
Figure 1-3
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Three Possible IS Roles
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Information System Categories
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Developing Information Systems Solutions

• A logical, systematic process
• Investigate
• Analyze
• Design
• Implement
• Maintain

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Why Chapter 1 Is Important

• Start to understand the concepts of IS and IT as
  it applies to a business.
• Appreciate how IS and IT can improve the success
  of a company.
• Recognize that almost all companies have
  integrated IS and IT into their core strategies.
• Realize that most of us need to integrate IS and
  IT into our core strategies relative to future
  jobs and careers.

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Chapter 1

• Foundations
• of Information Systems
• in Business

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Textbook
Designed for business students who are or will be
managers, entrepreneurs and business
professionals in E-Business enterprises.
The goal is to help business students learn how
to use and manage information technologies to
revitalize business processes, conduct electronic
commerce, improve business decision making and
gain competitive advantage.h
To accomplish this goal, it emphasizes the role
of the Internet, intranets and extranets to
provide a technology platform for electronic
business, commerce and collaboration within and
among inter-networked enterprises and global
markets
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Module 1 Foundation Concepts
Ch. 1 Foundations of IS in Business Ch. 2
Competing with Information
Technology
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Learning Objectives

• Start to appreciate why information systems are
  an increasingly important resource for a
  business.
• Be able to identify five areas of necessary
  information systems knowledge.
• Recognize the increasing importance of
  E-Business, E-Commerce and collaboration
  systems.
• Understand the five basic IS components.
• Start to understand the challenges that a
  business encounters to successfully manage
  information systems.

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Chapter 1
An ambitious chapter! Introduces a number of
topics that will be addressed in more detail in
subsequent chapters. Jumps into a number of
business and IS management issues right off the
bat.
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Raises Appropriate Questions

• Why study information systems?
• Do businesses really need information
  technology?
• Do YOU need to know about the use and management
  of
• information technology in business?
• Will YOU personally help to develop IS solutions
  
• to business problems at some time in the
  future?

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Why Study Information Systems?

• In many cases IT supports all critical business
• functions and core business processes.
• e.g. Intel, FedEx, Charles Schwab, Cisco Systems,
  
• Dell Computer, Wal-Mart Stores, Hewlett-
• Packard, Home Depot, IBM, etc.

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What you need to appreciate
There is no longer any distinction between an IT
project and a business initiative. IT at
Marriott is a key component of the products and
services that we provide to our customers. As
such, there is very little that goes on within
the company that either I personally or one of my
top executives is not involved with.
Carl Wilson
Executive Vice President and CIO Marriott
International
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What you need to understand to assess the logic
of this position

• The business.
• Information Technologies and systems as an
  enabling resource.

• Viewed from
• An End User (individual) Perspective.
• An Enterprise (company) Perspective.
• A Global Business Perspective.

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Information Systems Definition
Any organized combination of people, hardware,
software, communication networks and data
resources that collects, transforms and
disseminates information in an organization.
This definition is broader than just
computer-based information systems.
On the other hand, computer-based information
systems have become so common that it is natural
to use the term information systems to mean those
involving the use of a computer.
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Information System Resources
Figure 1-3
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IS Resources
Hardware Processors Peripheral
Units Input/Output Storage
Software Systems Software Application
Software Procedures
Networks Equipment Services
People End users Management IS Specialists
Data The heart of IS!
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Figure 1.2
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Understanding Systems

• What they are.
• Where and why they operate.
• Basic system components.
• The goal that systems play relative to
• business processes.
• The importance of information (data)
• quality.

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Think Systems!

• It is not unusual to hear someone use the
  expression, systems mentality.
• Webster defines a system as an assemblage or
  combination of things or parts forming a complex
  or unified whole.
• A second definition Procedures usually
  involving people and machines in which units are
  clearly defined and organized to achieve specific
  objectives.

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Systems

• We live in a world
• of systems!

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An Information System
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System Characteristics

• 1. System objectives and performance
  measurements.
• 2. Basic system components.
• 3. Essential resources.
• 4. Fixed constraints within its environment.
• 5. Involves management.
• Systems Approach, C. West Churchman

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Surrounded by Systems

• Transportation Systems
• Utility Systems
• Communication Systems
• Judicial Systems
• Educational Systems
• Waste Management Systems
• Recreational Systems
• Sewage Systems

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Human Systems

• Circulatory System
• Respiratory System
• Visual System
• Auditory System
• Digestive System
• Nervous System

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Highway System

• 1. System objectives Transport society and the
  goods it consumes.
• 2. Systems Environment An essential part of a
  community based on land that the governments own.
• 3. Resources of System Construction,
  maintenance, taxes, traffic data.
• 4. Components Bridges, overpasses, lanes,
  markers, signs and signals, rules regarding use.
• 5. Management of system Various state and
  federal government divisions.

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Information System Concepts

• A system is interrelated components with a
• common goal
• Inputting Data
• Processing Data to Information
• Outputting Information
• Feedback to Assess and Store Data
• Controlling System Performance

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System Concepts
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System Interdependence

• No system exists in a vacuum
• System environment
• Subsystems
• System boundaries

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A Business is a System
Helps to remember and to tie together

• Some business basics while remembering the
• importance of making a profit
• The understanding of business functions.
• The appreciation for the importance of
• business processes.

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A Business
A business is an organizational system where
economic resources (input) are transformed by
various organizational processes (processing)
into goods and services (output).
Information systems provide information
(feedback) on the operations of the system to
management for the direction and maintenance of
the system as it exchanges inputs and outputs
with its environment.
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Why Businesses Need IT

• The Fundamental Roles of Information Systems
• The Increasing Value of Information Technology

Made possible through the inter-networking of
computers to create an inter-networked enterprise.
This is often motivated by the need to achieve
and sustain a competitive advantage through the
use of information systems.
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E-Business Environment
The Organization Goals and Objectives Business
Strategies Business Processes Structure and
Culture IT Infrastructure
Customer Business Value
Use
Information Systems
Global Business Environment
Fig. 1.25
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Stakeholders in the Business Environment
The Community
Competitors
Management
Management
Feedback
Government Agencies
Information Systems
Customers
Goods and Services Products Services Payments Con
tributions Information Other Effects
Organizational Processes Market, Develop,
Produce, Delivery Products, Support Customers,
Other Processes
Economic Resources People Money Material Machines
Land Facilities Energy Information
Suppliers
Stockholders
Input
Output
Processing
Financial Institutions
Labor Unions
Fig. 1-4
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What is a Business?
An organization that provides a product and/or a
service that satisfies a need for which people
are willing to pay money.
Receipt of payments from customers enables a
company to make a profit IF its costs do not
exceed the amount of money received from its
customers.
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Lets Start a New Business!
Idea for a product or a service for which people
will pay us money. Business plan to explain and
direct the business. Money to finance operations
during the startup phase of the
business. Resources to start the business
Facilities Employees Services Customers Guts
and work ethic to make the business a success.
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Why Does a Company Need to Make a Profit?
Invest in new product development. Invest in
facilities and equipment. Invest in operational
improvements. Expand by acquiring another
company. Invest in employees (training and salary
increases) To justify borrowing money. To pay
stockholders a dividend.
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Important Things to Understand
Two terms 1) business functions 2)
business processes Will be frequently used
throughout this course.
It would be a good idea to make absolutely sure
that you know what they are.
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Business Functions
Function A group of people with related skills
(specialized) seems to be a good starting point
in understanding functions but this is a fairly
loose definition.
What prompts the creation and justification of
business functions?
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Manufacturing Companies Took a Simple Process
Raw Material
Assemble and Test
Make or Buy
Pack Ship
ORDER
CUSTOMER
Purchased Goods
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. . . And Complicated It
ORDER
Manufacturing
CUSTOMER
Distribution
Purchasing
Planning
Finance
Design
Sales
Often resulting in
Functional Measures
Departmental Barriers
Systems Constraints
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Complex Processes

• More Complexity
• More Cost
• Longer Production Cycle Times
• More Levels of Management

Leading to
Higher Overhead Costs
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Manufacturing Business Functions

• Research and Development
• Manufacturing
• Marketing and Sales
• Distribution
• Customer Service
• Finance and Accounting
• Human Resources

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Research and Development

• A major business function and the starting point
  for most new products and/or services

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Research and Development

• What is it?
• How important is it to the success of a
• business?
• Is this importance the same for all companies
• and all industries?
• How important is IT and IS in this business
• function?

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Research and Development
Although the terms are frequently used together
these are actually two different business
functions.
Research is the diligent and systematic inquiry
into a subject in order to discover or revise
facts or theories. (scientific/engineering
research) Development, often called product
development, takes a proven concept and/or
technology and makes it into a product.
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Research
Advanced technology endeavors involving highly
trained engineers and scientists (physicists,
chemists, etc.) An example of research is using
superconductor material as storage devices.
The research part of this example is for
scientists to make the breakthroughs in physics
and/or chemistry or both to create a new type of
storage device technology.
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Development
The development part is to figure out how to
package these technology breakthroughs into a
presentable form for products that can be
manufactured and sold.
Product development success can be measured by
product sales volumes and market share.
Research success is often indicated by the number
of new patents a company has obtained.
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Time Dimensions
Since it is focused on truly new findings,
research is time consuming, very costly and
frequently has high risk.
Adapting new technologies to marketable products
can also take a considerable amount of time.
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Shortening Time to Market
Taking less time to bring a new product to market
is a high priority for companies in general and
particularly high-tech companies.
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Intel Strategy
Intel has three development teams in place at the
same time.
One is dealing with the about to be announced
new product.
The second is working on the product that will
replace it.
A third group is working on the successor of this
replacement product.
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Intel Use of IT for Development
Cant develop microprocessors any other way than
with computer-based systems because of skill
shortages, costs, and time pressures.
Use computer-based design systems with
standardized design factors and performance and
configuration simulators.
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Development Strategies

• Alliances
• Acquisitions, e.g. Cisco Systems

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Cross-Functional Process
Manufacturing
Research and Development
Marketing and Sales
New Product Prototype
Competitive Analysis Market Research
New Product Development
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The IS Function Represents
A major business function. An important
contributor to company goals and objectives. A
major resource to support effective decision
making within the organization. A contributor to
developing competitive products and/or services
and/or business processes that enable them. A
significant cost factor and management
challenge.
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Why So Many Functions?

• Size
• Specialization
• Cost Effective
• Contribute to Basic Business Objectives

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Functional Requirements
Dont confuse business functions with functional
requirements.
The information system capabilities required to
meet the information needs of end users. Also
called systems requirements.
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Business Processes
Can overlap with business functions but not
necessarily.
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Business Processes
A continuous and regular action or succession of
actions, taking place or carried on in a definite
manner and leading to the accomplishment of some
result. Oxford English Dictionary
A process is a structured, measured set of
activities designed to produce a specified output
for a particular customer or market. Tom
Davenport Process
Innovation
How necessary, important work is done within an
organization
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Financial Processes
1. Cash Management 2. Budgeting 3. Performance
Reporting 4. Investment Planning 5. Foreign
Exchange 6. Investor Relations 7. Leasing 8.
Credit Management 9. Facilities Management 10.
Acquisition and Divestment of Business Units
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Business Process Reengineering
The structured aspects of a process is key to
achieving the benefits of process innovation.
Unless there is agreement on how work is, and
should be done, it is unlikely that it can be
systematically improved.
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Reegineering Definition
Reengineering is the fundamental rethinking and
radical redesign of business processes to
achieve dramatic improvements in critical,
contemporary measures of performance, such as
cost, quality, service and speed. Key words
are fundamental, radical, dramatic and processes.
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Time Out of Processes
1. Eliminate.
2. Consolidate.
3. Streamline.
4. Maximize the value-add and minimize the
non-value add activities.
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Role of Information Systems?
In support of any and/or all of these business
processes.
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Possible Exam Questions
1. What is a business process and what challenges
do they represent within many organizations?

2. What objective does process reengineering have
in most cases?
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Marketing Processes

• Market Analysis
• Product Assessment
• Channel Selection and Management
• Pricing
• Product Announcement
• Advertising
• Customer Events
• Consumer Marketing

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Sales Processes

• Direct Marketing (field sales force)
• Sales Branch Management
• Distributor Marketing
• Contracting
• Customer Education

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Manufacturing Processes

• Capacity Planning
• Production Planning (scheduling)
• Production Control
• Quality Management
• Procurement
• Inventory Control
• Distribution
• Outsourcing

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Legal Processes

• Regulatory Compliance
• Patents and Intellectual Property Rights
• Insurance
• Safety
• Environmental
• Labor

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Roles of Information Systems
Competitive Advantage
Effectiveness
Efficiency
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How important is Information Systems to
successfully run a business?
Volume
Speed
Complexity
According to Jack Callon
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Success and Failure with IT

• IT is not something that you can jump into. It
  needs to be carefully planned, managed, and
  understood.
• Relative to many other technologies IT is still
  in its infancy, so there are still limitations.

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Information System Categories
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Transaction Processing Systems
The basic business systems that serve the
operational level of the organization.
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Transaction Documents
Sales Orders Shipping Notices Customer
Invoices Customer Payments Work Orders Employee
Time Cards Employee Paychecks
Inventory Issue Tickets Physical Inventory
Purchase Orders Vendor Receipts Vendor
Returns Vendor Invoices Payments to Vendors
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Processing Essentials

• Correct and complete transactions.
• Correct and complete master records.
• Correct and complete inventory control
  application
• software.
• Complete and operational computer configuration.
• Trained and available staff.

JDC
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Someone Should Coin a Law
Successful small systems grow into larger systems.
Why and how?
Needs of the business. Businesses are in reality
a combination of sub-systems.
IT price/performance improvements. IS success
motivates doing more of the same. The ability to
conceptualize enterprise-wide systems.
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Number of Users
IT Growth Waves
1 billion
Global Information Society
Global Internetworked Society
Content
Networked Knowledge Workers
Connectivity
100 million
Individuals
Computerized Enterprises
Institutions
10 million
1970 1980 1990 2000 2010 2020 2030
Fig. 1.13
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Dont Forget
It took a significant amount of time for the
leading-edge companies to get where they are
today so that information systems are making a
major contribution to the success of their
business.
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Legacy Systems
Practically a swear word. Received a major
spotlight because of Y2K.
By definition, they are old. Not only related
to mainframes.
Why do they still exist?
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IS Relevance
Dont make the mistake of assuming that
Information Systems are equally important to all
businesses.
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Information Quality

• Usefulness of information is defined by
• Time
• Content
• Form