Chapter 1 Business Information Systems: An Overview

Question 1

analog systems

Answer 1

(systems based on a continuous signal that varies in strength or
quantity)
For
example, an analog copy machine reproduces images by reflection or a similar technique. The
copy may be good, but it is never as good as the original. And as you make a copy from the
copy, the quality deteriorates

Question 2

digital systems

Answer 2

capable of delivering data and information—quantities, text,
sound, pictures, video, and any other type of information—so that the original information can
be re-created with complete accuracy. That is, a digital copy is an exact copy of the original
Because computers and related devices
use the binary system—a system that uses two digits—they are referred to as digital systems

Question 3

Digital information

Answer 3

Digital information consists of zeroes and ones representing two states. When you have a
mechanism that can represent two states, such as electrically charged and uncharged elements,
magnetized and non-magnetized areas, light and no light, you have a way to represent the
zeroes and ones. Based on such signals, information can be represented, stored, communicated,
and processed digitally

Question 4

binary counting system

Answer 4

We are accustomed to using 10 digits to represent quantities. We call it the decimal counting
system. However, we could also use a system consisting of only two digits, zero and one, to
represent quantities. This is the binary counting system. Because computers and related devices
use the binary system—a system that uses two digits—they are referred to as digital systems.

Question 5

information technology
(IT)

Answer 5

Thus, systems thinking is served well by
information technology (IT), a term that refers to all technologies that collectively facilitate
construction and maintenance of information systems.
All knowledge workers—professionals, scientists, managers, and others who create new
information and knowledge in their work—must be familiar
with IT. Moreover, they must know which IT is relevant for
their work and what information they can obtain with a certain
technology or networked resource
Information technology provides excellent tools
for collecting, storing, and presenting facts

Question 6

Information Systems

Answer 6

information system (IS) consists of all the
components that work together to process data and produce information. Almost all business
information systems consist of many subsystems with subgoals, all contributing to the
organization’s main goal.

facts must be manipulated into useful information that indicates the best allocation of various resources,
including personnel, time, money, equipment, and other assets.
Regardless of the operations being managed, information systems (ISs) are important tools. Successful professionals must
know which ISs are available to their organizations and what
systems might be developed in the future

Question 7

data

Answer 7

The word data is derived from
the Latin datum, literally a given or fact, which might take the form of a number, a statement, or
a picture. Data is the raw material in the production of information

while data is
essentially raw materials, information is output. Just as raw materials are processed in
manufacturing to create useful end products, so raw data is processed in information systems to
create useful information

Question 8

information

Answer 8

Information, on the other
hand, is facts or conclusions that have meaning within a context. Raw data is rarely meaningful
or useful as information. To become information, data is manipulated through tabulation,
statistical analysis, or any other operation that leads to greater understanding of a situation.

while data is
essentially raw materials, information is output. Just as raw materials are processed in
manufacturing to create useful end products, so raw data is processed in information systems to
create useful information

5 characteristics of useful information

Question 9

process

Answer 9

A process is any
manipulation of data, usually with the goal of producing information
Some processes, however, produce yet another set
of data.

Question 10

5 characteristics of useful information

Answer 10

relevant
complete
accurate
current
economical

Question 11

system (2 Types)

Answer 11

system is an array of components that work together to achieve a common goal,
or multiple goals, by accepting input, processing it, and producing output in an organized
manner. Consider the following examples:
● A sound system consists of many electronic and mechanical parts, such as a laser head, an
amplifier, an equalizer, and so on. This system uses input in the form of electrical power and
sound recorded on a medium such as a CD or DVD, and processes the input to reproduce
music and other sounds. The components work together to achieve this goal.
● Consider the times you have heard the phrase “to beat the system.” Here, the term “system”
refers to an organization of human beings—a government agency, a commercial company, or
any other bureaucracy. Organizations, too, are systems; they consist of components—people
organized into departments and divisions—that work together to achieve common goals.

Question 12

Subsystem

Answer 12

a system consists of several subsystems—
components of a larger system—with subgoals, all contributing to meeting the main goal.
Subsystems can receive input from, and transfer output to, other systems or subsystems
Subsystems, by definition, are always open, because as components of a bigger
system, they must receive information from, and give information to, other subsystems.

Question 13

Closed system

Answer 13

closed system stands alone, with no connection to another system: nothing flows in from
another system; nothing flows out to another system. For example, a small check-producing
system that prints and cuts checks when an employee enters data through a keyboard is a closed
system. The system might be isolated for security purposes

Question 14

open system

Answer 14

open system interfaces and
interacts with other systems. For example, an accounting system that records accounts
receivable, accounts payable, and cash flow is open if it receives its payroll figures from the
payroll system. Subsystems, by definition, are always open, because as components of a bigger
system, they must receive information from, and give information to, other subsystems.

Question 15

database

Answer 15

a large collection of electronic records

Question 16

information map

Answer 16

the description of data and
information flow within an organization—shows a network of information subsystems that
exchange information with each other and with the world outside the system. In an ideal
organization, no human would need to retrieve information from one IS and transfer it to
another. The organization would capture only new raw data, usually from its operations or from
outside the organization. Then, data captured at any point in the system would automatically
become available to any other subsystem that needs it. Thus, systems thinking is served well by
information technology (IT)

Question 17

Systems thinking

Answer 17

Systems thinking is the basic reasoning
behind equipping organizations with enterprise software applications
Thinking of an organization in terms of its suborganizations or subsystems—called systems
thinking—is a powerful management approach because it creates a framework for excellent
problem solving and decision making. To solve problems, managers need to identify them,
which they do by recognizing the subsystems in which the problems occur and solving the
problems within those subsystems’ constraints and strengths.
Systems thinking can also help keep managers focused on the overall goals and operations of
a business. It encourages them to consider the entire system, not only their specific subsystem,
when solving problems and making decisions. A satisfactory solution for one subsystem might
be inadequate for the business as a whole. For example, when the sales department creates a web
site to take online customer orders, it automates a formerly labor-intensive activity of the sales
subsystem. This saves cost. However, increased orders may cause understocking of finished
goods. With systems thinking, improving the sales process could also improve other company
processes. Without systems thinking, managers from other departments aren’t involved in the
decision, so they don’t benefit. In the case of the sales department, if other managers are
involved in planning for automated online ordering, they could suggest that sales data recorded
on a shared database—a large collection of electronic records—connected to the web also be
accessible to other departments such as shipping and manufacturing. The shipping department
could use the records to expedite packaging and shipping, thanks to the information that
appears on a computer monitor rather than a sheet of paper. The manufacturing units could use
the order records for planning resources such as laborers and inventory. Figuratively, by applying
systems thinking, effective managers view their areas of responsibility as puzzle pieces. Each
piece is important and should fit well with adjacent pieces, but the entire picture should always
be kept in view

Question 18

enterprise software applications
or enterprise applications

Answer 18

Enterprise software
applications are systems that serve many parts of the organization by minimizing the need for
human data entry and ensuring timely, useful information for the organization’s entire supply
chain, including taking customer orders, receiving raw materials, manufacturing and shipping,
and billing and collection. In the service sector, companies often use document management
systems, enabling workers from many departments to add information and signatures to a
document from request to approval, or from draft to a final document

An
SCM (supply chain management system) is an enterprise application because the systems that support each business process are
connected to each other to form one large IS. Technically, anyone with access to the system can
know the status of every part of an order received by the business

Question 19

Components of an
information system

Answer 19

Data Input that the system takes to produce information

Hardware A computer and its peripheral equipment: input, output, and storage
devices; hardware also includes data communication equipment

Software Sets of instructions that tell the computer how to take data in, how to
process it, how to display information, and how to store data and
information

Telecommunications Hardware and software that facilitate fast transmission and reception of
text, pictures, sound, and animation in the form of electronic data

People Information systems professionals and users who analyze organizational
information needs, design and construct information systems, write
computer programs, operate the hardware, and maintain software

Procedures Rules for achieving optimal and secure operations in data processing;
procedures include priorities in dispensing software applications and
security measures

Question 20

cloud computing

Answer 20

Several trends have made the use of information systems (ISs) very important in business:
A “bring your technology with you” environment has become mainstream with the adoption
of mobile computing, tablets, and cloud computing.

Question 21

Software as a Service (SaaS)

Answer 21

Several trends have made the use of information systems (ISs) very important in business:
Quick and reliable communication lines and access to the Internet and the web have created
affordable software applications using Software as a Service (SaaS) implementation
methodologies

Question 22

input

Answer 22

Entering data into the IS (input)

Question 23

data processing

Answer 23

Changing and manipulating the data in the IS (data processing)

Question 24

output

Answer 24

Getting information out of the IS (output

Question 25

storage

Answer 25

Storing data and information (storage).

Question 26

transaction

Answer 26

a business event: a sale, a purchase, a payment, the hiring of a new
employee, and the like. These transactions can be recorded on paper and later entered into a
computer system; directly recorded through a transaction processing systems (TPS

Question 27

transaction processing systems (TPS)

Answer 27

transaction processing systems (TPS), such
as a point-of-sale (POS) machine, scanner, or camera
A TPS is any system that records transactions. Often, the same
system also processes the transactions, summarizing and routing information to other systems;
therefore, these systems are transaction processing systems, not just transaction recording systems

Transaction processing systems (TPSs) are the most widely used information
systems. The predominant function of TPSs is to record data collected at the
boundaries of organizations, in other words, at the point where the organization
transacts business with other parties. They also record many of the transactions
that take place inside an organization

Question 28

Computer Equipment for Information Systems (5 components)

Answer 28

input device
process device - computer
output device
storage device
networking device

Question 29

The Four Stages of Processing

Answer 29

input
data processing
output
storage

Question 30

telecommunications

Answer 30

In addition to communication that takes place between computer components,
communication occurs between computers over distances

Question 31

supply chain management (SCM) systems

Answer 31

The term “supply chain” refers to the sequence of activities involved in producing and selling a
product or service. In industries that produce goods, the activities include marketing, purchasing
raw materials, manufacturing and assembly, packing and shipping, billing, collection, and afterthe-sale services. In service industries, the sequence might include marketing, document
management, and monitoring customer portfolios. Information systems that support these
activities and are linked to become one large IS providing information on any stage of a business
process are called supply chain management (SCM) systems

Question 32

enterprise resource planning (ERP) systems

Answer 32

the information they provide supports the planning of shipping resources such as personnel,
funds, raw materials, and vehicles. However, ERP is a misnomer for the systems, because they
mainly serve managers in monitoring and modifying business processes as they occur, and not
only for planning.
also, like SCM, eliminate need for data re-entry

Question 33

management information system (MIS)

Answer 33

Managers and other
professionals plan, control, and make decisions. As long as a system supports one or more of
these activities, it may be referred to as a management information system (MIS)

Question 34

Customer relationship management (CRM) systems

Answer 34

help manage an organization’s
relationships with its customers. The term refers to a large variety of information systems, from
simple ones that help maintain customer records to sophisticated systems that dynamically analyze
and detect buying patterns and predict when a specific customer is about to switch to a competitor

The main goals of CRM
systems are to increase the quality of customer service, reduce the amount of labor
involved in serving customers, and learn as much as possible about the buying
habits and service preferences of individual customers

Effective CRM systems are accessible to both sales and service people

Question 35

business intelligence (BI) systems

Answer 35

ISs whose purpose is to glean from raw data relationships and trends that might help
organizations compete better are called business intelligence (BI) systems. Usually, these
applications consist of sophisticated statistical models, sometimes general and sometimes
tailored for an industry or an organization

Question 36

data warehouses

Answer 36

The applications access large pools of data, usually
transactional records stored in large databases called data warehouses

Question 37

decision support systems (DSSs)

Answer 37

Professionals often need to select one course of action from many alternatives. Because they have
neither the time nor the resources to study and absorb long, detailed reports of data and
information, organizations often build information systems specifically designed to help make
decisions.

Question 38

expert systems

Answer 38

While DSSs rely on
models and formulas to produce concise tables or a single number that determines a decision,
expert systems (ESs) rely on artificial intelligence techniques to support knowledge-intensive
decision-making processes.

Question 39

geographic information systems (GISs)

Answer 39

In some cases, the information decision makers need is related to a map or floor plan. In such
cases, special ISs called geographic information systems (GISs) can be used to tie data to
physical locations. A GIS application accesses a database that contains data about a building,
neighborhood, city, county, state, country, or even the entire world. By representing data on a
map in different graphical forms, a user is able to understand promptly a situation taking place
in that part of the world and act upon it. Examples of such information include flood-prone
regions, population levels, the number of police officers deployed, probabilities of finding
minerals, transportation routes, and vehicle allocation for transportation or distribution systems

Question 40

Functional business areas (4 areas)

Answer 40

Functional business areas
include, but are not limited to, accounting, finance, marketing, and human resources

ISs serve various purposes throughout an organization in what are known as functional business
areas—in-house services that support an organization’s main business

in a growing number of organizations these systems are modules of a
larger enterprise system, an SCM, or ERP system

Question 41

e-commerce

Answer 41

networked commerce—
buying and selling goods and services via a telecommunications network

Question 42

programmer/analysts

Answer 42

Many IT professionals start their careers as programmers
A programmer/analyst is partly involved in the analysis of business needs and ISs, but the
greater part of the job involves setting up business applications

Question 43

systems analysts

Answer 43

Many IT professionals start their careers as programmers, or programmer/analysts, and
then are promoted to systems analysts

A systems analyst is responsible
for researching, planning, and recommending software and systems choices to meet an
organization’s business requirements. Systems analysts are normally responsible for developing
cost analyses, design considerations, implementation timelines, and feasibility studies of a
computer system before making recommendations to senior management. A big part of this job
includes developing alternative system plans based on (1) analyzing system requirements
provided by user input, (2) documenting development efforts and system features, and (3)
providing adequate specifications for programmers.

To succeed, systems analysts must possess excellent communication skills to translate users’
descriptions of business processes into system concepts. They must understand a wide range of
business processes and ways in which IT can be applied to support them.
Most importantly, systems analysts must always keep in mind that they are agents of
change, and that most people resist change. Unlike many other occupations, theirs often
involves the creation of new systems or the modification of existing ones. Because new or
modified systems often affect human activities and organizational cultures, systems analysts
must be able to convince both line workers and managers that change will benefit them. Thus,
these IS professionals must possess good persuasive and presentation skills.
Senior systems analysts often advance to become project leaders. In this capacity, they are put
in charge of several analysts and programmers. They seek and allocate resources, such as funds,
personnel, hardware, and software, that are used in the development process, and they use project
management methods to plan activities, determine milestones, and control the use of resources.

Question 44

database administrator (DBA)

Answer 44

The database administrator (DBA) is responsible for the databases and data warehouses of
an organization—a very sensitive and powerful position. Since access to information often
connotes power, this person must be astute not only technologically but politically as well. He
or she must evaluate requests for access to data from managers to determine who has a real
“need to know.” The DBA is responsible for developing or acquiring database applications and
must carefully consider how data will be used. In addition, the DBA must adhere to federal,
state, and corporate regulations to protect the privacy of customers and employees.
A growing number of organizations link their databases to the web for use by employees,
business partners, and consumers. Attacks on corporate databases by hackers and computer
viruses have made the DBA’s job more difficult. In addition to optimizing databases and
developing data management applications, this person must oversee the planning and
implementation of sophisticated security measures to block unauthorized access but at the same
time to allow easy and timely access to authorized users. The DBA is also highly involved in the
implementation of SCM systems, because they access corporate databases.

Question 45

network administrator

Answer 45

responsible for acquiring, implementing, managing,
maintaining, and troubleshooting local area networks throughout the organization and their
interfaces with the wide area networks such as the Internet. He or she is also often involved in
selecting and implementing network security measures such as firewalls and access codes.

Question 46

system administrator

Answer 46

“sys admin”—is responsible for managing an
organization’s computer operating systems. System administrators often manage and maintain
several operating systems, such as UNIX and Microsoft Windows and ensure that the operating
systems work together, support end users’ business requirements, and function properly. System
administrators are also responsible for the day-to-day maintenance of an organization’s
operating systems, including backup and recovery, adding and deleting user accounts, and
performing software upgrade

Question 47

mobile applications developer

Answer 47

These positions require technical expertise relating to the various software
development tools for mobile devices and programming languages such as Java,
ASP, and SQL. Mobile applications developers are often required to have
experience with designing and gathering information about the specific needs
of an application. Communication and system design skills are important for
this type of professional. Because mobile applications are used directly by
consumers, it is also important to understand their product preferences and
needs

Question 48

webmaster

Answer 48

responsible for creating and maintaining the
organization’s website as well as its intranet and extranet. Webmasters are increasingly involved
in creatively deciding how to represent the organization on the web. These decisions involve
elements of marketing and graphic design. Since many organizations use the web for commerce,
webmasters must also be well-versed in web transaction software, payment-processing software,
and security software. In small organizations, the website may be the responsibility of a single
person. In large organizations, the webmaster often manages a crew of programmers who
specialize in developing and updating code specifically for webpages and their links with other
organizational ISs.

Question 49

chief security officer (CSO) / chief information security officer (CISO)

Answer 49

Because of the growing threat to information security, many organizations have created the
position of chief security officer (CSO), or chief information security officer (CISO). In most
organizations, the person in this position reports to the chief information officer (CIO) (see next
section), but in some cases the two executives report to the same person, usually the chief
executive officer (CEO). The rationale is that security should be a business issue, not an IT issue.
A major challenge for CSOs is the misperception of other executives that IT security is an
inhibitor rather than an enabler to operations.

Question 50

chief information officer (CIO)
chief technology officer (CTO)

Answer 50

responsible
for all aspects of an organization’s ISs, is often, but not always, a corporate vice president. Some
companies prefer to call this position chief technology officer (CTO). However, you might
find organizations where there are both a CIO and a CTO and one reports to the other. There is
no universal agreement on what the responsibility of each should be. Yet, in most cases when
you encounter both positions in one organization, the CTO reports to the CIO.

A person who holds the position of CIO must have both technical understanding of current
and developing information technologies and business knowledge. As Figure 1.6 shows, the CIO
plays an important role in integrating the IS strategic plan into the organization’s overall
strategic plan. He or she must not only keep abreast of technical developments but also have a
keen understanding of how different technologies can improve business processes or aid in the
creation of new products and services

• CIO (Chief Information Officer): responsible for all aspects of information system internally, including
  running IT operations, streamlining business processes with technology, manage IT vendors, drive
  profitability through efficiency / cost-reduction
• CTO (Chief Technology Officer): has similar duties as CIO but focuses more on external vs. internal
  customers, focuses on using technology to enhance company’s product offerings and tries to focus on
  growing revenue