K204 Chapter 3

information from LLM are not always _______

accurate

Systems

groups of integrated and interrelated components that work together to achieve a goal

5 Components of an Information System

1. Hardware

2. Software

3. Data

4. Procedures

5. People

1. Hardware

physical equipment used - computers, keyboards…

2. Software

programs and instructions that tell hardware what to do

3. Data

raw facts and figures that the system collects, stores, and processes

4. Procedures

steps involved in using the information system to achieve a goal

5. People

users who interact with the system - employees, customers…

Operational Efficiency

• automation, less mistakes, saves time

Financial Performance

• saves money because automation instead of manual

• better visibility into business’s performance

Decision-Making Enhancement

• better decisions - more up-to-date information

• data

• data visualization (charts, graphs)

• predict future trends

• test “what if” scenarios before making big decisions

Customer Value Creation

• better experiences for customers

• personalization based on customer preferences and history

• tracking issues and solving them quickly

• gain insights

Strategic Alignment

• measure progress of meeting goals, grow with the business

Which of the following are recognized business values of information systems? (Choose all that apply)

Customer Value Creation

Decision-Making Enhancement

Financial Performance

Operational Efficiency

Strategic Alignment

Customer Value Creation

Decision-Making Enhancement

Financial Performance

Operational Efficiency

Strategic Alignment

Early Adoption of Technology

Establishing market dominance and lasting advantages by being the first to use new tech.

Product/Service Differentiation

Using technology to make offerings stand out from competitors.

Low-Cost Leadership

Employing sophisticated systems to manage supply chains and keep costs lower.

Technology + Business Strategy and examples

• information systems help with low costs

  • EX: Walmart - supply chain systems - track inventory and reorder products @ the right time

• tech can be used to make prods/service stand out from competition

  • EX: Netflix - recommendation algorithm

• being first to adopt new tech can have lasting advantages

  • EX: Amazon - e-commerce innovations and AWS cloud services (market dominance)

Changing Industries Through Technology

• Information systems often disrupt traditional industries

  • EX: Uber with Uber app

• reach new markets that were previously inaccessible

  • connect directly with consumers, bypassing middlemen

• unique tech or valuable data can create barriers making difficult competition

  • EX: Google - search engine - high-quality and personalization

Information as a Business Asset

• collected information is valuable

  • some organizations sell data as a source of revenue - EX: Nielsen

• digital platforms become more valuable with more use - create a “network effect”’

• advanced data analysis can reveal customer needs + opps. before companies notice

Excellence in Operations Through Technology

• efficient supply chain → ↓ inventory costs

  • EX: Zara (tech-driven system to move designs from concept → store)

• information systems can improve product + service quality

  • EX: Spotify - enhanced music streaming

• online marketing - better personalization

Work Together Through Technology

• build networks of partners through tech. platforms

  • EX: Salesforce

• collaboration through technology

  • EX: Microsoft + OpenAI

Data-to-Wisdom Hierarchy

helps us understand how raw facts become valuable insights

4. Data

raw facts and numbers w/o context

• EX: list of sales transactions, website clicks

3. Information

• outcome of organized data put into context

• answers W.W.W.W Qs (Who, What, When, Where)

2. Knowledge

• when we understand patterns + relationships

• answers “HOW” Qs

• know relations b/tw information

1. Wisdom

• using knowledge to make good judgements + decisions

• answers “WHY” Qs

• helps with difficult choices

• deep understanding to make strategic decisions

List all Basic Data Management Concepts

1. data management

2. data collection

3. data storage

4. data quality

5. data governance

6. data security + privacy

7. data integration

data management

how businesses handle their data throughout its life cycle

• from collection → archiving/deleting

data collection

where it begins; gather data from many sources

KEY: collect correct data w/o overwhelming systems

data storage

keeping data safe + accessible

data quality

making sure data is accurate + reliable

data governance

setting rules about way of data management

• who can access what

• duration of data storage

• “house rules” for data

data security + privacy

protection data from unauthorized access while respecting customer privacy

• scrambling (encryption), secure passwords, etc.

data integration

bringing data together from different sources for effective use

• to see a complete picture

database

organized collection of data stored electronically - digital filing cabinet

relational database

• most common type of database

• organizes data into tables with rows + columns

Purposes of Using Databases (5)

1. Customer Relationship Management (CRM)

2. Inventory Management

3. Financial Databases

4. Human Resources Database

5. E-commerce Database

Customer Relationship Management (CRM)

• databases that store info about customers, interactions, + purchase history

• allows for better service, stronger customer relationships

Inventory Management

• databases track product info, stock levels, locations, and movement

• helps with popular items, reordering if low stock

Financial Databases

• store transaction records, accounts, budgets, and financial reports

• help track money coming in + out, prepare reports

Human Resource Database

• maintain employee records

  • personal info., job deets, performance reviews, benefits

• help businesses manage work effectively

E-commerce Database

• power online stores by storing product catalogs, customer accounts, orders, payment info.

• w/o online databases, online shopping not possible

• everytime add something to cart, database records that

data-driven decision making

using facts + analysis to make business decisions

List the ways in which data-driven decision making shows up (6)

1. reduced risk + uncertainty

   1. from having real info. to support decisions

2. faster response to changes

   1. when closely monitoring data

3. more objective decisions

   1. looking at the actual data

4. continuous improvement

5. competitive advantage

6. resource optimization

   1. do more with what businesses have

Data is:

1. Structured - consistency + reliability

2. Stored - managed within systems to ensure accuracy + accessibility

3. Analyzed - processed to uncover patterns + trends in support of decision-making

Types of Information Systems in Organizations (6)

1. Transaction Processing Systems (TPS)

2. Management Information Systems (MIS)

3. Decision Support Systems (DSS)

4. Executive Information Systems (EIS)

5. Enterprise Resource Planning (ERP) Systems

6. Customer Relationship Management (CRM) Systems

Transaction Processing Systems (TPR)

• handles day-to-day basic business transactions

• workhorse of business information systems - processes quickly

• MAIN PURPOSE: record + process everyday business events

  • capture data where transaction occurs

  • process data to established rules - calculating/updating

  • store details for future reference

  • generate basic documents like receipts/paychecks

  • update related info (inventory levels/account balance)

Management Information Systems (MIS)

• takes data collected by TPS → useful reports that help managers run the business

• MAIN PURPOSE: provide structured reports that help with operational + tactical management

  • convert raw data →reports

  • present info in formats easy 2 understand

  • provide regular reports on a scheduled basis

  • allow identification of trends/problems by data comparison (past data)

Decision Support Systems (DSS)

• helps managers make better decisions for complex/non-routine problems

• interactive, explore data

• MAIN PURPOSE: support semi-structured decision-making through interactive analysis

  • analyze data with flexibility, “what-if” analysis

  • combine data from multiple sources, in + out of organization

  • include models to predict outcomes, support decision processes

• more sophisticated than MIS - more user interaction, group decision-making

Executive Information Systems (EIS)

• for top executives to monitor overall performance of organization

• provide a high-level view that helps senior leaders track how business is doing

• “dashboard”

• MAIN PURPOSE: support decision-making at @ highest levels of organization

  • present info in highly visual, easy-to-understand formats

  • focus on key performance indicators (KPIs)

  • allow executives to “drill down” from summary to more details when needed

  • include external information about business environment, competition, industry trends

  • highlight exceptions + problems that need attention

Enterprise Resource Planning (ERP) Systes

• comprehensive software platform that integrates all big business fxns into one system with shared database

• MAIN PURPOSE: integrate business processes across departments + ensure everyone is working with same info

  • create single source of truth

  • automate flow of info. b/tw business fxns

  • standardize business processes

  • provide real-time visibility into operations

  • reduce duplicate data entry + errors

Customer Relationship Management (CRM) Systems

• helps manage interactions with current + potential customers

• complete record of company’s relationship with customers

• “super-powered contact list “

  • every convo, purchase, preference, etc.

• MAIN PURPOSE: improve customer relationships + ⬆ customer loyalty + retention

  • centralize customer info.

  • track complete history of interactions across all channels

  • manage sales processes from lead generation → closing deals

  • support marketing campaigns

  • help customer service reps. access important info

  • ID cross-selling + up-selling opportunities based on customer history + preferences

relational database

stores + organizes data in tables (consists of rows + columns)

Tables

collections of related data

Rows

represents a single record

Columns

represents a specific attribute of the data

in a relational database, tables can be related to e/o using key fields:

• Primary Key

• Foreign Key

Primary Key

unique identifier for each record in a table

Foreign Key

field in one table that links to a primary key in a nother table, establishing a relationship b/tw the 2 tables

relational databases use a language called _______ to manage and manipulate the data

SQL - Structured Query Language

Why are data stored in separate tables in relational databases?

Normalization

1. Avoid Data Redundancy

2. Maintain Data Consistency

Avoid Data Redundancy

data redundancy is minimized by splitting data into separate tables based on related entities

Maintain Data Consistency

changes to data only need to be made in one place

5-component Model of Information Systems