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5 Attributed to: David T. Bourgeois, Ph.D. saylor.org

ales ashboard ales ashboard "he digital dashboard gives a

8uick view of revenue earned

this year compared to last,

number of new leads

generated, top 9 products,

sales per rep and regionalsales(

ports 2nalytics 2ny professional team 'onsultants and specialists to

look at various data to make

a team more successful and

recruit players that add to the

team/s success(

'oursera(com 1nline education( “"ake the

world/s best courses, online,

for free(%

ideo lectures and online

assignments are offered for

free( !t costs a nominal fee

for a certificate of

completion(oeing 'orporation 23 ystem !ntegrated enterprise4wide

information system that

handles procurement,

manufacturing, marketing,

sales, employee benefits,

accounting, financeobert 2nthony is famous for ?making accounting easier/( "he key, he said, was to focus on decision

making and how accounting supports that( !n 0@A9, >obert #c&amera, ecretary of efense at the time,

asked 2nthony to become the 'omptroller for the efense epartment( "his was a time when defense

companies had projects and budgets that were out of control( 2nthony/s leadership and innovation helped

with this problem and gave us a view of accounting as a control system( 7e developed a simple

organizational control model to describe how information systems can be classified in organizations(

"aylor ()$: http:**+++.saylor.org*'ourses*bus-

http://www.saylor.org/courses/bus206http://www.saylor.org/courses/bus206

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ource )ikipedia 2nthony "riangle

!t is a simple model that makes a lot of intuitive sense( 2t the bottom of a company, the transactions that

take place data driven and the decision making is repetitive and well defined( 2s you move to the middle

level of the firm, decision making is made by managers( "he decisions are tactical in nature, determining

how the company should be run( 2t the very highest level, strategic, the '4.evels 5'-1, '+1, '!1ecently, )indows 0E

became available, conspicuously skipping )indows @( "he reason given was that )indows F was

unpopular( #icrosoft wanted )indows 0E to stand out as more than a simple upgrade to )indows

F, so they skipped )indows @( "his was clearly a strategic decision(

2nthony/s triangle model is easy to understand and if gives us a convenient way to categorize and

understand the purpose of different information systems in organizations(


https://en.wikipedia.org/wiki/Anthony_trianglehttp://www.saylor.org/courses/bus206http://www.saylor.org/courses/bus206https://en.wikipedia.org/wiki/Anthony_triangle

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Deining Inor!ation "yste!s

2lmost all programs in business re8uire students to take a course in something called information systems(

ut what e*actly does that term mean$ .et/s take a look at some of the more popular definitions, first from

)ikipedia and then from a couple of te*tbooks:

• “!nformation systems 5!6 is the study of complementary networks of hardware and software that

people and organizations use to collect, filter, process, create, and distribute data(%0

• “!nformation systems are combinations of hardware, software, and telecommunications networks

that people build and use to collect, create, and distribute useful data, typically in organizational

settings(%C

• “!nformation systems are interrelated components working together to collect, process, store, and

disseminate information to support decision making, coordination, control, analysis, and

viualization in an organization(%G

1. Wikipedia entry on "Information System s ," as displayed on August 19, 2012. Wikipedia: TheFree Encyclopedia. San Francisco Wikimedia Foundation.!ttpen.#ikipedia.org#ikiInformation$systems$%discipline&.2. '(cerpted from Information Systems Today - Managing in the Digital World, fourt! edition.)rentice*+all, 2010.. '(cerpted from Management Information Systems, t#elft! edition, )rentice*+all, 2012.


http://en.wikipedia.org/wiki/Information_systems_(discipline)http://en.wikipedia.org/wiki/Information_systems_(discipline)http://www.saylor.org/courses/bus206http://en.wikipedia.org/wiki/Information_systems_(discipline)http://en.wikipedia.org/wiki/Information_systems_(discipline)http://www.saylor.org/courses/bus206

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Inor!ation "yste!s or Business and Beyond

2s you can see, these definitions focus on two different ways of describing information systems:

the components that make up an information system and the role that those components play in an

organization( .et/s take a look at each of these(

The Co!ponents o Inor!ation "yste!s

2s ! stated earlier, ! spend the first day of my information systems class discussing e*actly what the

term means( #any students understand that an information system has something to do with databases

or spreadsheets( 1thers mention computers and e4commerce( 2nd they are all right, at least in part:

information systems are made up of different components that work together to provide value to an

organization(

"he first way ! describe information systems to students is to tell them that they are made up of five components: hardware,

software, data, people, and process( "he first three, fitting under the category technology, are generally what most students think of

when asked to define information systems( ut the last two, people and process, are really what separate the idea of information

systems from more technical fields, such as computer science( !n order to fully understand information systems, students must

understand how all of these components work together to bring value to an organization(

Te'hnology

"echnology can be thought of as the application of scientific knowledge for practical purposes( +rom the

invention of the wheel to the harnessing of electricity for artificial lighting, technology is a part of our lives

in so many ways that we tend to take it for granted( 2s discussed before, the first three components of

information systems B hardware, software, and data B all fall under the category of technology( -ach of

these will get its own chapter and a much lengthier discussion, but we will take a moment here to introduce

them so we can get a full understanding of what an information system is(

/ard+are

!nformation systems hardware is the part of an information system you can touch B the physical

components of the technology( 'omputers, keyboards, disk drives, i3ads, and flash drives are all e*amples

of information systems hardware( )e will spend some time going over these components and how they

all work together in chapter C(

"ot+are

oftware is a set of instructions that tells the hardware what to do( oftware is not

tangible B it cannot be touched( )hen programmers create software programs,

what they are really doing is simply typing out lists of instructions that tell thehardware what to do( "here are several categories of software, with the two main

categories being operating4system software, which makes the hardware usable, and

application software, which does something useful( -*amples of operating systems

include #icrosoft )indows on a personal computer and =oogle/s 2ndroid on a

mobile phone( -*amples of application software are #icrosoft -*cel and 2ngry irds( oftware will be

e*plored more thoroughly in chapter G(


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Ch.1:What Is an Inor!ation "yste!# 0

Data

"he third component is data( Hou can think of data as a collection of facts( +or e*ample, your street

address, the city you live in, and your phone number are all pieces of data( .ike software, data is also

intangible( y themselves, pieces of data are not really very useful( ut aggregated, inde*ed, and

organized together into a database, data can become a powerful tool for businesses( !n fact, all of the

definitions presented at the beginning of this chapter focused on how information systems manage data(1rganizations collect all kinds of data and use it to make decisions( "hese decisions can then be analyzed

as to their effectiveness and the organization can be improved( 'hapter I will focus on data and databases,

and their uses in organizations(

et+or2ing Co!!uni'ation: A 3ourth Te'hnology Pie'e#

esides the components of hardware, software, and data, which have long been considered the core

technology of information systems, it has been suggested that one other component should be added:

communication( 2n information system can e*ist without the ability to communicate B the first personal

computers were stand4alone machines that did not access the !nternet( 7owever, in today/s hyper4

connected world, it is an e*tremely rare computer that does not connect to another device or to a network("echnically, the networking communication component is made up of hardware and software, but it is

such a core feature of today/s information systems that it has become its own category( )e will be

covering networking in chapter 9(

People

)hen thinking about information systems, it is easy to get focused

on the technology components and forget that we must look

beyond these tools to fully understand how they integrate into an

organization( 2 focus on the people involved in information

systems is the ne*t step( +rom the front4line help4desk workers, tosystems analysts, to programmers, all the way up to the chief

information officer 5'!16, the people involved with information

systems are an essential element that must not be overlooked( "he

people component will be covered in chapter @(

Pro'ess

"he last component of information systems is process( 2 process is a series of steps undertaken to

achieve a desired outcome or goal( !nformation systems are becoming more and more integrated with

organizational processes, bringing more productivity and better control to those processes( ut simply

automating activities using technology is not enough B businesses looking to effectively utilize

information systems do more( Using technology to manage and improve processes, both within a

company and e*ternally with suppliers and customers, is the ultimate goal( "echnology buzzwords such

as “business process reengineering,% “business process management,% and “enterprise resource planning%

all have to do with the continued improvement of these business procedures and the integration of

technology with them( usinesses hoping to gain an advantage over their competitors are highly

focused on this component of information systems( )e will discuss processes in chapter F(

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4 Inor!ation "yste!s or Business and Beyond

The )ole o Inor!ation "yste!s

&ow that we have e*plored the different components of information systems, we need to turn our attention

to the role that information systems play in an organization( o far we have looked at what the components

of an information system are, but what do these components actually do for an organization$ +rom our

definitions above, we see that these components collect, store, organize, and distribute data throughout the

organization( !n fact, we might say that one of the roles of information systems is to take data and turn itinto information, and then transform that into organizational knowledge( 2s technology has developed, this

role has evolved into the backbone of the organization( "o get a full appreciation of the role information

systems play, we will review how they have changed over the years(

The ainra!e 6ra

+rom the late 0@9Es through the 0@AEs, computers were

seen as a way to more efficiently do calculations( "hese

first business computers were room4sized monsters, with

several refrigerator4sized machines linked together( "he

primary work of these devices was to organize and store

large volumes of information that were tedious to manage

by hand( 1nly large businesses, universities, and

government agencies could afford them, and they took a

crew of specialized personnel and specialized facilities to IBM 704 Mainframe (Copyright: Lawrence Livermore

maintain( "hese devices served dozens to hundreds of National Laboratory

users at a time through a process called time4sharing("ypical functions included scientific calculations and

accounting, under the broader umbrella of “data processing(%

!n the late 0@AEs, the #anufacturing >esources 3lanning 5#>36 systemswere introduced( "his software, running on a mainframe computer, gave

companies the ability to manage the manufacturing process, making it

more efficient( +rom tracking inventory to creating bills of materials to

scheduling production, the #>3 systems 5and later the #>3 !! systems6 !egistere" tra"emar# of

gave more businesses a reason to want to integrate computing into their International B$siness Machines

processes( !# became the dominant mainframe company( &icknamed

“ig lue,% the company became synonymous with business computing( 'ontinued improvement in

software and the availability of cheaper hardware eventually brought mainframe computers 5and their little

sibling, the minicomputer6 into most large businesses(

The PC )evolution

!n 0@J9, the first microcomputer was announced on the cover of %op$lar Mechanics: the 2ltair FFEE(

!ts immediate popularity sparked the imagination of entrepreneurs everywhere, and there were 8uickly

dozens of companies making these “personal computers(% "hough at first just a niche product for computer

hobbyists, improvements in usability and the availability of practical software led to growing sales( "he

most prominent of these early personal computer makers was a little company known as 2pple 'omputer,

headed by teve Kobs and teve )ozniak, with the hugely successful “2pple !!(% &ot wanting to be left

out of the revolution, in 0@F0 !# 5teaming with a little company called #icrosoft for their operating4

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system software6 hurriedly released their own version of the personal computer, simply called the “3'(%

usinesses, who had used !# mainframes for years to run their businesses, finally had the permission

they needed to bring personal computers into their companies, and the !# 3' took off( "he !# 3' was

named &ime magazine/s “#an of the Hear% for 0@FC(

ecause of the !# 3'/s open architecture, it was easy for other companies to copy, or “clone% it(

uring the 0@FEs, many new computer companies sprang up, offering less e*pensive versions of the 3'(

"his drove prices down and spurred innovation( #icrosoft developed its )indows operating system andmade the 3' even easier to use( 'ommon uses for the 3' during this period included word processing,

spreadsheets, and databases( "hese early 3's were not connected to any sort of network; for the most part

they stood alone as islands of innovation within the larger organization(

Client8"erver

!n the mid40@FEs, businesses began to see the need to connect their computers together as a way to

collaborate and share resources( "his networking architecture was referred to as “client4server% because

users would log in to the local area network 5.2&6 from their 3' 5the “client%6 by connecting to a

powerful computer called a “server,% which would then grant them rights to different resources on the

network 5such as shared file areas and a printer6( oftware companies began developing applications thatallowed multiple users to access the same data at the same time( "his evolved into software applications

for communicating, with the first real popular use of electronic mail appearing at this time(

!egistere" tra"emar# of

'%

"his networking and data sharing all stayed within the confines of each business,

for the most part( )hile there was sharing of electronic data between companies,

this was a very specialized function( 'omputers were now seen as tools to

collaborate internally, within an organization( !n fact, these networks of

computers were becoming so powerful that they were replacing many of the

functions previously performed by the larger mainframe computers at a fraction

of the cost(!t was during this era that the first -nterprise >esource 3lanning 5->36 systems were developed and run on

the client4server architecture( 2n ->3 system is a software application with a centralized database that can

be used to run a company/s entire business( )ith separate modules for accounting, finance, inventory,

human resources, and many, many more, ->3 systems, with =ermany/s 23 leading the way, represented

the state of the art in information systems integration( )e will discuss ->3 systems as part of the chapter

on process 5chapter @6(

The World Wide Web and 68Co!!er'e

+irst invented in 0@A@, the !nternet was confined to use by universities, government agencies, and

researchers for many years( !ts rather arcane commands and user applications made it unsuitable for mainstream use in business( 1ne e*ception to this was the ability to e*pand electronic mail outside the

confines of a single organization( )hile the first e4mail messages on the !nternet were sent in the early

0@JEs, companies who wanted to e*pand their .2&4based e4mail started hooking up to the !nternet in the

0@FEs( 'ompanies began connecting their internal networks to the !nternet in order to allow

communication between their employees and employees at other companies( !t was with these early

!nternet connections that the computer truly began to evolve from a computational device to a

communications device(

!n 0@F@, "im erners4.ee developed a simpler way for researchers to share information over the

network at '->& laboratories, a concept he called the )orld )ide )eb(I

"his invention became the


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launching point of the growth of the !nternet as a way for businesses to share information aboutthemselves(


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1- Inor!ation "yste!s or Business and Beyond

2s web browsers and !nternet connections became the norm, companies rushed to grab domain names and

create websites(

!n 0@@0, the &ational cience +oundation, which governed how the

!nternet was used, lifted restrictions on its commercial use( "he year 0@@I

saw the establishment of both eay and 2mazon(com, two true pioneers in !egistere" tra"emar# of

ma)onthe use of the new digital marketplace( 2 mad rush of investment in &echnologies* Inc+

!nternet4based businesses led to the dot4com boom through the late 0@@Es,

and then the dot4com bust in CEEE( )hile much can be learned from the speculation and crazy economic

theories espoused during that bubble, one important outcome for businesses was that thousands of miles of

!nternet connections were laid around the world during that time( "he world became truly “wired% heading

into the new millenium, ushering in the era of globalization, which we will discuss in chapter 00(

2s it became more e*pected for companies to be connected to the !nternet, the digital world also

became a more dangerous place( 'omputer viruses and worms, once slowly propagated through the

sharing of computer disks, could now grow with tremendous speed via the !nternet( oftware

written for a disconnected world found it very difficult to defend against these sorts of threats( 2 whole

new industry of computer and !nternet security arose( )e will study information security in chapter A(

Web .-

2s the world recovered from the dot4com bust, the use of technology in business continued to evolve at

a frantic pace( )ebsites became interactive; instead of just visiting a site to find out about a business and

purchase its products, customers wanted to be able to customize their e*perience and interact with the

business( "his new type of interactive website, where you did not have to know how to create a web page

or do any programming in order to put information online, became known as web C(E( )eb C(E is

e*emplified by blogging, social networking, and interactive comments being available on many websites(

"his new web4C(E world, in which online interaction became e*pected, had a big impact on many

businesses and even whole industries( ome industries, such as bookstores, found themselves relegated to

a niche status( 1thers, such as video rental chains and travel agencies, simply began going out of business

as they were replaced by online technologies( "his process of technology replacing a middleman in a

transaction is called disintermediation(

2s the world became more connected, new 8uestions arose( hould access to the !nternet be

considered a right$ 'an ! copy a song that ! downloaded from the !nternet$ 7ow can ! keep information

that ! have put on a website private$ )hat information is acceptable to collect from children$ "echnology

moved so fast that policymakers did not have enough time to enact appropriate laws, making for a )ild

)estBtype atmosphere( -thical issues surrounding information systems will be covered in chapter 0C(

The Post8PC World

2fter thirty years as the primary computing device used in most businesses, sales of the 3' are now

beginning to decline as sales of tablets and smartphones are taking off( Kust as the mainframe before it, the

3' will continue to play a key role in business, but will no longer be the primary way that people interact

and do business( "he limited storage and processing power of these devices is being offset by a move to

“cloud% computing, which allows for storage, sharing, and backup of information on a massive scale( "his

I( '->&Ls M"he irth of the )eb(M http:NNpublic(web(cern(chNpublicNenNaboutNweb4en(html

http://public.web.cern.ch/public/en/about/web-en.htmlhttp://public.web.cern.ch/public/en/about/web-en.htmlhttp://public.web.cern.ch/public/en/about/web-en.html

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Attributed to: David T. Bourgeois, Ph.D.saylor.org


will re8uire new rounds of thinking and innovation on the part of businesses as technology continues to

advance("he

-ras of usiness 'omputing

Era Hardware Operating System Applications

#ainframe50@JEs6

"erminals connected tomainframe computer(

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to early CEEEs6

!# 3' “clone% connected to

company intranet()indows O3 #icrosoft

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.aptop connected to company

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websites, mobile apps

Can Inor!ation "yste!s Bring Co!petitive Advantage#

!t has always been the assumption that the implementation of information systems will, in and of itself,

bring a business competitive advantage( 2fter all, if installing one computer to manage inventory can make

a company more efficient, won/t installing several computers to handle even more of the business continue

to improve it$

!n CEEG, &icholas 'arr wrote an article in the ,arvar" B$siness !eview that 8uestioned this

assumption( "he article, entitled “!" oesn/t #atter,% raised the idea that information technology has

become just a commodity( !nstead of viewing technology as an investment that will make a company stand

out, it should be seen as something like electricity: !t should be managed to reduce costs, ensure that it is

always running, and be as risk4free as possible(2s you might imagine, this article was both hailed and scorned( 'an !" bring a competitive

advantage$ !t sure did for )almart 5see sidebar6( )e will discuss this topic further in chapter J(


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1 Inor!ation "yste!s or Business and Beyond

"idebar: Wal!art (ses Inor!ation "yste!s to Be'o!e the World9s $eading

)etailer

)almart is the world/s largest retailer, earning P09(C

billion on sales of PIIG(@ billion in the fiscal year that

ended on Kanuary G0, CE0C( )almart currently serves over CEE million customers every week, worldwide(9)almart/s

rise to prominence is due in no small part to their use of

information systems(

1ne of the keys to this success was the

implementation of >etail .ink, a supply4chain

management system( "his system, uni8ue when initially !egistere" tra"emar# of -al.Mart 'tores* Inc+

implemented in the mid40@FEs, allowed )almart/s

suppliers to directly access the inventory levels and sales information of their products at any of )almart/s

more than ten thousand stores( Using >etail .ink, suppliers can analyze how well their products are selling

at one or more )almart stores, with a range of reporting options( +urther, )almart re8uires the suppliers touse >etail .ink to manage their own inventory levels( !f a supplier feels that their products are selling out

too 8uickly, they can use >etail .ink to petition )almart to raise the levels of inventory for their products(

"his has essentially allowed )almart to “hire% thousands of product managers, all of whom have a vested

interest in the products they are managing( "his revolutionary approach to managing inventory has allowed

)almart to continue to drive prices down and respond to market forces 8uickly(

"oday, )almart continues to innovate with information technology( Using its tremendous market

presence, any technology that )almart re8uires its suppliers to implement immediately becomes a business

standard(

"u!!ary

!n this chapter, you have been introduced to the concept of information systems( )e have reviewed several

definitions, with a focus on the components of information systems: technology, people, and process( )e

have reviewed how the business use of information systems has evolved over the years, from the use of

large mainframe computers for number crunching, through the introduction of the 3' and networks, all

the way to the era of mobile computing( uring each of these phases, new innovations in software and

technology allowed businesses to integrate technology more deeply(

+rom this chapter, it is evident that all departments in a company use information systems in some

capacity( )here businesses really take advantage of technology is in integrating information systems

across organizations( 2ll organizations have 2ccounting, ales, +inance, 7uman >esources, #arketing,

1perations and "echnology departments( !t is no accident that 'olleges of usiness often mirror this

functionality( "oday, business functions share information to make better decisions using integrated

information systems( Hou will learn more about this in 'hapter F, usiness 3rocesses( Qeep in mind,

information systems offer businesses the opportunity operate more efficiently and effectively, ultimately

maintaining their competitiveness with other companies(

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)e are now to a point where every company is using information systems and asking the 8uestion:

oes it bring a competitive advantage$ !n the end, that is really what this book is about( -very

businessperson should understand what an information system is and how it can be used to bring a

competitive advantage( 2nd that is the task we have before us(

"tudy :uestions

0( )hat are the five components that make up an information system$ 7ardware, software, data, people, processes

C( )hat are three e*amples of information system hardware$ .aptops, phone, tablet

9( )almart CE0C 2nnual >eport(

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Ch.1:What Is an Inor!ation "yste!# 1;

G( #icrosoft )indows is an e*ample of which component of information systems$

I( )hat is application software$

9( )hat roles do people play in information systems$

A( )hat is the definition of a process$

J( )hat was invented first, the personal computer or the !nternet 52>32&-"6$

F( !n what year were restrictions on commercial use of the !nternet first lifted$ )hen were eay

and 2mazon founded$

@( )hat does it mean to say we are in a “post43' world%$

0E( )hat is 'arr/s main argument about information technology$

6

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Attributed to: David T. Bourgeois, Ph.D. saylor.org

book ch. 1

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