Unit 2:Infomrmation System and

Business Application
 Information System
Information system is one that collects , processes , stores , analyzes and
disseminates data and information for a specific purpose.
Primary goal is to economically process data into information or
knowledge.
The composition of Information System is:
Hardware
Software
Data
Procedures
Networks
People
Another Imp component of an Information System is one or more smaller
information systems , which are referred as an application program.
Application Program is a computer program designed to support specific task or a
business process or in some cases to support another application program.

The collection of a application programs in a single department is usually

considered a Departmental Information System.
Example: The collection of application program in the Human Resources area is
called the Human Resource Information System (HRIS).
 Information System Classification
By Organizational Structure
An information system (IS)
can span departments,
business units and corporations.

Departmental IS
Enterprise-Wide IS
Inter-Organizational IS

Information systems are usually

connected by means of
electronic networks
 Information System - Classification By
Function (Department)
An information system (IS) support each
department in a corporation.

Operations
Accounting
Finance
Marketing
Human resources
Transaction Processing Systems (TPS): Automates
routine and repetitive tasks that are critical to the operation
of the organization
Information System - Classification By Function
(Department)

An information system (IS) support each department in

a corporation.

Chapter 2 5
 Classification and Types of Information
System
Transaction Processing Systems
organizations perform routine, repetitive tasks
a TPS supports the monitoring, collection, storage,
processing, and dissemination of the
organizations basic business transactions
frequently, several transaction processing systems
exist in one company
todays transaction processing systems are much
more sophisticated and complex
 Management Information Systems (MIS)
provides periodic reports
generates weekly and monthly summaries by
product, customer, or salesperson
initially, MIS had an historical orientation
today, MIS reports may include summary reports,
for the current period or for any number of
previous periods - used for monitoring, planning,
and control
functional management information systems
(MIS)
access, organize, summarize, and display information
for supporting routine decision making in the functional
areas
geared toward middle managers
Enterprise Information System:
An enterprise information system (EIS) is any kind of information
system which improves the functions of an enterprise business processes
by integration.

This means typically offering high quality of service, dealing with large
volumes of data and capable of supporting some large and possibly
complex organization or enterprise.

Enterprise systems follows such processes , and they usually integrate

tasks done in different departments.

One of the most popular enterprise application is Enterprise Resource

Planning , which enables companies to plan and manage the resources of
an entire enterprise.

Another popular enterprise systems are :

Customer Relationship Management
Business Intelligence
 Inter organizational System:
Some information systems connect two or
more organizations. They are referred to as
Inter organizational Information System(IOS).
Example: Buyers and sellers
The one can order electronically ,bill
electronically from suppliers and pay
electronically.
Since such transactions are supported by
standardized computer languages in electronic
data interchanges(EDIs).
Information Flow Across Organizational
Boundaries
 When a company places an order for
components, the supplier performs the
shipping activity. The supplier delivers a
physical package and electronic invoice to the
customer.

The customers receiving department takes

the delivery and verifies the invoice. Then the
receiving department stocks the items in the
inventory and updates the inventory level.
 Global Information System:
IOSs that connect companies located in two or
more countries are referred to as Global
Information Systems.
If the customer from other countries who buy
from you online, you may need the support of
a global system. The same is true if your
supplier are overseas.
 Very Large and Special systems:
Some systems are very large and they are
often global in nature.
Some systems include many sub systems.
Some Information systems are designed for
only one industry,
such as
airline reservation system.
Universities using administrative information
system as well as academic information systems in
a multi campus system is another example.
 Information System Infrastructure and
Architecture
Information Systems Architecture:

Physical facilities, hardware, software, databases

services, and managemen t that support all
computing resources in an organization
Five major components of infrastructure
compute r hardware
general-purpose software
networks and communication facilities
database
information management personnel
 Tells how specific computing resources are
arranged, operated, and managed
 a high-level map or plan of the information
requirements
a manner in which these requirements will be
satisfied
a guide for current IT operations
a blueprint for future IT directions
meets the organizations strategic business needs
must tie together the information requirements,
the infrastructure, and the applications
similar to the conceptual planning of a house
 The Web Based IT Architectures

Web-based systems refer to those applications or

services that are resident on a server that is accessible
using a Web browser. The only client-side software
needed to access and execute these applications is a
Web browser environment.
The Internet Electronic Storefronts
Intranets Electronic Markets
Extranets Electronic Exchanges
Corporate Portals M-Commerce
E-commerce Systems
Enterprise Web

Chapter 2 16
 The Internet
Sometimes called simply the Net, the Internet is a
worldwide system of computer networksa network of
networks hence Internet, in which users at any one computer
can get information from any other computer

The Internet uses a portion of the total resources of the

currently existing public telecommunication networks.
Technically, what distinguishes the Internet is its use of a set
of protocols called TCP/IP (Transmission Control
Protocol/Internet Protocol).

Chapter 2 17
 Intranets
An intranet is the use of Web technologies to create a private
network, usually within one enterprise.
It is typically a complete LAN, or several intra-connected LANs
Intranets are used for:
work-group activities
the distributed sharing of projects within the enterprise
Controlled access to company financial documents
use of knowledge management, research materials, online training, and
other information that requires distribution within the enterprise.

Chapter 2 18
 Extranets
Connect several intranets via the Internet, by adding a
security mechanism and some additional functionalities

They form a larger virtual network that allows remote users

(such as business partners or mobile employees) to securely connect
over the Internet to the enterprises main intranet.

Extranets are also employed by two or more enterprises

(suppliers & buyers) to share information in a controlled fashion,
and therefore they play a major role in the development of
business-to-business electronic commerce and Supply Chain
systems.

Chapter 2 19
 E-commerce Systems
Web-based systems that enable business transactions to be
conducted seamlessly twenty-four hours a day, seven days a
week
Some classifications of E-commerce systems are:
B2C (Business to Consumer)
B2B (Business to Business)
B2E (Business to Employee)
The major components of Web-based EC are:
Electronic storefronts
Electronic markets
Mobile commerce

Chapter 2 20
 Electronic Storefronts

These are Web-equivalents of a physical store. Through the

electronic storefront, an e-business can display and/or sell its
products.
The storefront may include electronic catalogs that contain
descriptions, graphics, and possibly product reviews.
They have following common features and functions:
an E-catalog
a shopping cart
a checkout mechanism
a payment processing feature
a back office order fulfillment system

Chapter 2 21
 Electronic Exchanges
A special form of electronic markets electronic exchanges, are
Web-based public marketplaces where many buyers and many
sellers interact dynamically.

Originally set as trading places for commodities, electronic

exchanges have emerged for all kinds of products and services

Chapter 2 22
 Enterprise Web
Is an open environment for managing and delivering Web
applications. It combines services from different vendors in a
technology layer that spans rival platforms and business
systems, creating a foundation for building applications at a
lower cost.

Applications, including business integration, collaboration,

content management, identity management, and search,
which work together via integrating technologies.

The result is an environment that spans the entire enterprise.

Chapter 2 23
 SOA
A service-oriented architecture (SOA) is a
style of software design where services are
provided to the other components by
application components, through a
communication protocol over a network. The
basic principles of service-oriented
architecture are independent of vendors,
products and technologies.
Cloud Computing
Cloud computing is an
information technology (IT)
paradigm, a model for enabling
ubiquitous access to shared
pools of configurable resources
(such as computer networks,
servers, storage, applications and
services), which can be rapidly provisioned
with minimal management effort, often over the Internet.
 Business applications: Roles of IT in E-
commerce
E-Commerce or Electronics Commerce is a methodology of modern business
which addresses the need of business organizations, vendors and customers to
reduce cost and improve the quality of goods and services while increasing the
speed of delivery.

E-commerce refers to paperless exchange of business information using following

ways.
Electronic Data Interchange (EDI)
Electronic Mail (e-mail)
Electronic Fund Transfer (EFT)
Other Network-based technologies
Business applications: Roles of IT in E-commerce

E-Commerce or Electronics Commerce business models can generally categorized

in following categories.

Business - to - Business (B2B)

Business - to - Consumer (B2C)
Consumer - to - Consumer (C2C)
Consumer - to - Business (C2B)
Business applications: Roles of IT in E-commerce

Business - to - Business (B2B)

Website following B2B business
model sells its product to an
intermediate buyer who then
sells the product to the final
customer.

example:
a wholesaler places an order
from a company's website and
after receiving the consignment,
sells the end product to final
customer who comes to buy the
product at wholesaler's retail
outlet.
Business applications: Roles of IT in E-commerce

Business - to - Consumer
(B2C)
Website following B2C business
model sells its product directly
to a customer. example:
A customer can view products
shown on the website of business
organization.

The customer can choose a

product and order the same.
Website will send a notification
to the business organization via
email and organization will
dispatch the product/goods to
the customer.
Business applications: Roles of IT in E-commerce

Consumer - to - Consumer
(C2C)
Website following C2C business
model helps consumer to sell
their assets like residential
property, cars, motorcycles etc.
or rent a room by publishing
their information on the website.

Website may or may not charge

the consumer for its services.

Another consumer may opt to

buy the product of the first
customer by viewing the
post/advertisement on the
website.
Business applications: Roles of IT in E-commerce
Consumer - to - Business
(C2B)
In this model, a consumer
approaches website showing
multiple business organizations
for a particular service.
Consumer places an estimate of
amount he/she wants to spend
for a particular service.

example:
comparison of interest rates of
personal loan/ car loan provided
by various banks via website.
Business organization who
fulfills the consumer's
requirement within specified
budget approaches the customer
and provides its services.
Business applications: Roles of IT in M-commerce.

Mobile commerce (m-commerce, m-business)any e-commerce done in a wireless

environment, especially via the Internet
Can be done via the Internet, private communication lines, smart cards, etc.
Creates opportunity to deliver new services to existing customers and to attract new
ones.
Business applications: Roles of IT in M-commerce.

Classification of M-Commerce
Services
Financial
e.g. Secure banking services
Entertainment
e.g. Mobile Gambling
Shopping
e.g. Purchase of goods
Information
e.g. Local Information
Payment
e.g. Electronic Wallet
Advertising
e.g. Intelligent Advertising
Business applications: Roles of IT in M-commerce.
M-Commerce Terminology
Generations
1G: 1979-1992 wireless technology
2G: current wireless technology; mainly accommodates text
2.5G: interim technology accommodates graphics
3G: 3rd generation technology (2001-2005) supports rich media (video clips)
4G: will provide faster multimedia display (2006-2010)
Terminology and Standards
GPS: A Satellite-based tracking system Global Positioning System
PDA: Personal Digital Assistanthandheld wireless computer
SMS: Short Message Service. A technology for sending short text messages on cell
phone.
EMS: Enhanced Messaging Service ,capable of simple animation, tiny pictures
MMS: Multimedia Messaging Service, to deliver rich media.
WAP: Wireless Application Protocol, A technology that offers Internet browsing
from wireless devices.
Smart phones:Internet-enabled cell phones with attached support applications.
Bluetooth : A chip technology wireless standard designed for short range connection
on mobile devices
Wi-Fi: wireless networking technology that uses radio waves
M-Commerce Advantages
Mobilityusers carry cell phones or other mobile devices
Broad reachpeople can be reached at any time
Ubiquityeasier information access in real-time
Conveniencedevices that store data and have Internet, intranet,
extranet connections
Instant connectivityeasy and quick connection to Internet,
intranets, other mobile devices, databases
Personalizationpreparation of information for individual
consumers
Localization of products and servicesknowing where the user is
located at any given time and match service to them
 The Role of Information Systems in
Business Today
Information systems are transforming business
and the visible results of this include the increased
use of cell phones and wireless
telecommunications devices, a massive shift
toward online news and information, booming e-
commerce and Internet advertising, and new
federal security and accounting laws that address
issues raised by the exponential growth of digital
information.

The Internet has also drastically reduced the costs

of businesses operating on a global scale.
 These changes have led to the emergence of the digital firm, a firm in which:

Most of the firm's significant business relationships with customers, suppliers, and
employees are digitally enabled and mediated.
Core business processes, or logically related business tasks, are accomplished through
digital networks.

Key corporate assets (intellectual property, core competencies, and financial and
human assets) are managed through digital means
Business responses to changes in their environment are enhanced through digital
communications, allowing for time shifting (business being conducted 24x7)
and space shifting(business being conducted globally or beyond traditional geographic
boundaries).
 Information systems are essential for conducting day-
to-day business in the U.S. and most other advanced
countries, as well as achieving strategic business
objectives.

Some firms, such as Amazon and E*Trade, would be

nonexistent without information systems. Some
service industries, such as finance, insurance, and real
estate industries, could not operate without
information systems.

The ability of a firm to use IT is becoming intertwined

with the firm's ability to implement corporate strategy.
FIGURE: THE INTERDEPENDENCE BETWEEN ORGANIZATIONS
AND INFORMATION SYSTEMS
 Business firms invest heavily in information systems
to achieve six strategic business objectives:
Operational excellence: Efficiency, productivity, and improved changes in business practices and
management behavior

New products, services, and business models: A business model describes how a company
produces, delivers, and sells a product or service to create wealth. Information systems and
technologies create opportunities for products, services, and new ways to engage in business.

Customer and supplier intimacy: Improved communication with and service to customers raises
revenues, and improved communication with suppliers lowers costs.

Improved decision making: Without accurate and timely information, business managers must
make decisions based on forecasts, best guesses, and luck, a process that results in over and
under-production of goods, raising costs, and the loss of customers.

Competitive advantage: Implementing effective and efficient information systems can allow a
company to charge less for superior products, adding up to higher sales and profits than their
competitors.

Survival: Information systems can also be a necessity of doing business. A necessity may be driven
by industry-level changes, as in the implementation of ATMs in the retail banking industry. A
necessity may also be driven by governmental regulations, such as federal or state statutes
requiring a business to retain data and report specific information.
 Perspectives on Information Systems
An information system is a set of interrelated components that collect or
retrieve, process, store, and distribute information to support decision
making and control in an organization. Information systems can also be
used to analyze problems, visualize complex subjects, and create new
products.

Information is data , or raw facts, shaped into useful form for humans.
 Input, processing, and output are the three activities in an
information system that produce the information an
organization needs.

Input captures or collects raw data from within the

organization or from its external environment. Processing
converts this raw input into a meaningful form.

Output transfers the processed information to the people

who will use it or to the activities for which it will be used.

Information systems also require feedback, which is output

that is returned to appropriate members of the
organization to help them evaluate or correct the input
stage.
 FIGURE:FUNCTIONS OF AN INFORMATION SYSTEM
 It is important to distinguish information systems, which are
designed to produce information and solve organizational
problems, from the computer technology and software that is
typically used to create and manage information systems.
Computer literacy focuses primarily on knowledge of information
technology. Information systems literacy , the understanding of
information systems, includes a behavioral and technical approach
to understanding the broader organization, management, and
information technology dimension of systems and their power to
provide solutions.

The field of management information systems (MIS) tries to

achieve this broader information systems literacy.
 INFORMATION SYSTEMS ARE MORE THAN COMPUTERS

The dimensions of information systems include organizations,

management, and information technology.

The key elements of an organization are its people, structure, business

processes, politics, and culture. An organization coordinates work through
a structured hierarchy and formal standard operating procedures.
Managerial, professional, and technical employees form the upper levels
of the organization's hierarchy while lower levels consist of operational
personnel.