Figure 1.1 depicts the elements central to our study of Information Systems (IS). Many may be familiar, and some have been introduced earlier in this chapter.
Hardware and Software The ability to plan and manage business operations depends partly on knowledge of the hardware and software available. For instance, is production manageable without knowledge of robotics? It goes without saying that technological developments have a profound effect on information systems; enterprise systems, e-business, databases, and business intelligence systems are but a few examples. Hardware and software technology provides the foundation on which IS and business operations rest.
Technology Insight 1.1
Radio Frequency ID Tags
Bar codes revolutionized the tracking of merchandise and shipments by including an easily readable label to identify a product or shipping container full of products. Bar codes dramatically cut the time needed to inventory packages, items within packages, and even truck-sized shipping containers. Because the codes were standardized, this technology also improved the accuracy with which products could be tracked and accounted for.
Now another technology is appearing that will take this revolution a step farther. Radio Frequency ID Tags (RFID) are intelligent chips that can be embedded in or attached to a product. These chips transmit descriptive data through packaging and shipping containers, so humans need not open and physically examine each item. The more advanced (and expensive) versions of RFID periodically send out signals identifying their location, reducing further the need for human intervention or time-consuming searches for particular products or shipments. They are also much faster to scan than their bar code equivalent, especially since an entire container’s contents can be assessed at once, in the same time a single bar code could be scanned manually.
RFID is being used by the military to track shipments to war zones. It is also being investigated as a way to track radioactive or dangerous materials during transport. But the most widespread and commonplace applications of RFID will likely be in manufacturing and distribution, where the devices are being investigated to track everything from automobiles as they proceed through the assembly line to items of clothing in the stock room of a retail store.
RFID will improve a company’s ability to track inventory throughout all processes. Savings related to reduced need for humans to track inventory, less need for excess inventory, and better
awareness of supplier and customer shipment location and times will propel more companies to investigate this emerging technology.
Sources: Steve Konecki, “Sophisticated Supply,” Informationweek(December 10, 2001), http://www.informationweek.com/story/IWK20011209S0012 (as of January 27, 2002); Cheryl Rosen, “RFID Chips Put to the Test,” Informationweek(July 2, 2001), p. 55.
Databases Important to a complete understanding of IS are databases, both internal and external to the company; the quantity and type of data available in these databases; and methods of retrieving those data. To perform analysis or to prepare information for management decision making, a business professional must be able to access and use data from internal and external databases. Chapter 3 explores the design and use of an organization’s own databases.
Reporting To design reports generated by an information system, the business professional must know what outputs are required or desirable. A user might prepare a report on an occasional basis using powerful report-generating tools or a database query language (discussed in Chapter 3). Scheduled reports appear periodically as part of normal IS function. Government agencies such as the Internal Revenue Service and the Securities and Exchange Commission require some reports. Other reports, such as sales analysis, are useful internally.
What 10 elements are included in the study of IS?
Traditionally, internal auditors and IS professionals have been charged with controlling business processes. However, this responsibility has expanded to others because of the difficulty of controlling modern, complex business processes. Today’s business process owners need to work with internal auditing and the IS staff, and also business process owners in partnering companies, to ensure that the activities in their business processes are secure and reliable. Chapters 8 and 9 discuss control, the means by which one assures that the intended actually happens. Business process Chapters 10 through 14 further demonstrate controls in action that facilitate development and implementation of well-controlled business processes.
The next three elements of Information Systems study, business operations, events processing, and management decision making, comprise a major focus of this text, business processes. A business process is a set of business events that together enable the creation and delivery of an organization’s products or services to its customers. It was the successful interaction among business processes that enabled Amazon.com to fill all those Harry Potter book orders during peak demand periods. Knowledge of these processes is essential for success as a technology user, consultant, business process owner, or Information Technology (IT) specialist.
Organizations engage in activities or operations, such as hiring employees, purchasing inventory, and collecting cash from customers. An IS operates in concert with these business operations. Many IS inputs are prepared by operating departments—the action or work centers of the organization—and many IS outputs are used to manage these operations. Managers must analyze an IS in light of the work the organization performs. For example, to advise management and to prepare reports for management decision making, a marketing manager must understand the organization’s product cycles.
As organizations undertake their business operations, events, such as sales and purchases, occur. Data about these events must be captured and recorded to mirror and monitor business operations. The events have operational, managerial, and IS aspects. To design and use the IS, the business professional must know what event data are needed and how they are processed.
Management Decision Making
The information used for a decision must be tailored to the type of decision under consideration. Furthermore, information is more useful if it recognizes the personal management styles and preferences of the decision maker. For example, the manager of Department A prefers to receive a monthly cash flow statement that groups receipts and payments into broad categories. The manager of Department B, on the other hand, wants to see more detailed information in the form of an analysis of payments by vendors. Chapter 5 examines decision making and the business intelligence systems that support it.
Systems Development and Operation
Information Systems that process business events and provide information for management decision making must be designed, implemented, and effectively operated. Business professionals often participate in systems development projects. They may be users or business process owners contributing requests for certain functions, or auditors advancing controls for the new system. Choosing the data for a report, designing that report, or configuring an enterprise system are examples of systems development tasks that can be accomplished by a business professional. Chapters 6 and 7 examine systems development and operation, and the business professional’s role in those processes.
To present the results of their endeavors effectively, business professionals must possess strong oral and written communication skills. Have your professors been drumming this message into you? If not, you’ll become acutely aware of its importance when you enter the job market. There are few easy answers in the study of IS. Professionals must evaluate alternatives, choose solutions, and defend their choices. Technical knowledge won’t be enough for the last task.
To design and operate the IS, a business professional must understand the use to which the information will be put. As an illustration, suppose you were designing an IS for the billing function at XYZ, Inc. Would you invoice customers at the time the customer’s purchase order was received, or would you wait until XYZ’s shipping department notified you that the goods had been shipped? You need to know the situations for which the former is normally correct (e.g., e-business retail sales) and for which the latter is correct (e.g., typical supply-chain operations for businesses).