Chapter 03 - Information Systems Introduction

Information System (IS)

A network of components that collects, stores, processes, and distributes information to support decision-making, operations, and strategy.

Hardware

Physical devices used in IS like computers, servers, and printers.

Software

Programs and applications that direct hardware to perform tasks, including operating systems.

Data

Raw facts and figures collected by an information system.

Procedures

Documented instructions and policies for using an information system.

People

Users of an IS, including employees and stakeholders.

Operational Efficiency

Automating tasks, reducing errors, and speeding reporting.

Financial Performance

Cutting costs, increasing sales, and using dashboards for finance.

Decision-Making Enhancement

Using accurate, timely data to make better decisions.

Customer Value Creation

Personalizing offerings and improving customer experiences.

Strategic Alignment

Ensuring IS supports business goals and adapts to change.

Transaction Processing System (TPS)

Processes daily business transactions accurately. Capture, process, store, and update transactions for daily operations.

Management Information System (MIS)

Summarizes TPS data into structured reports for managers. Summarizes TPS data into reports for managerial decisions.

Decision Support System (DSS)

Helps semi-structured decisions with interactive analysis. Purpose Supports semi-structured decision-making with scenario analysis.

Executive Information System (EIS)

Dashboards and KPIs for executives' strategic decisions. Provides executives with dashboards and strategic insights.

Enterprise Resource Planning (ERP) System

Integrates business processes across departments with a shared database. Purpose Integrates business processes into a unified platform.

Customer Relationship Management (CRM) System

Tracks customer interactions to improve relationships and loyalty. Purpose Enhances customer relationships, loyalty, and retention.

DIKW Pyramid

Data → Information → Knowledge → Wisdom hierarchy

Data Management

Collecting, storing, ensuring quality, governing, and integrating data.

Database

Organized electronic data for efficient storage, retrieval, and management.

Relational Database

Stores data in tables and allows relationships between tables.

CRM Database

Stores customer information and interaction history.

Inventory Database

Tracks products, stock levels, and movement.

Financial Database

Stores transactions, accounts, budgets, and reports.

HR Database

Maintains employee records, job details, and performance reviews

E-commerce Database

Stores product, order, and payment information for online sales.

Data-Driven Decision Making

Making choices using data analysis rather than intuition.

Competitive Advantage Through Technology

Using digital tools to reduce costs, differentiate, and dominate markets.

Industry Disruption

Using technology to reshape markets and business models (e.g., Uber, Telehealth).

Information as a Business Asset

Data can be monetized, leveraged for network effects, and analyzed for insights.

Smart Operations

Using real-time data and technology to optimize supply chains and production.

Data Lifecycle

Collecting, storing, ensuring quality, governing, and integrating data.

Data (DIKW)

Raw, unorganized facts with no context.

Information (DIKW)

Data organized to answer Who, What, When, Where.

Knowledge (DIKW)

Understanding patterns and relationships, answering How.

Wisdom (DIKW)

Strategic use of knowledge, answering Why.

Relational Database Structure

Organizes data in tables with rows and columns and links tables.

Operational Value of IS

Improves efficiency by automating tasks and reducing errors.

Financial Value of IS

Cuts costs, increases sales, and improves reporting.

Decision-Making Value of IS

Supports better decisions with accurate data.

Customer Value of IS

Personalizes services and improves customer experiences.

Strategic Value of IS

Supports goals, tracks progress, and aligns with strategy.

Smart Marketing with IS

Uses behavioral targeting and A/B testing to improve conversion rates.