Information Systems

What Every Business Student Needs to Know, Second Edition

Efrem G. Mallach

• Publisher: CRC Press
• Year: 2020
• ISBN:
  9780429590436
• Edition: 2
• Topic: Business
• Subtopic: Information Management
• Index: Business

Most information systems textbooks overwhelm business students with overly technical information they may not need in their careers. This textbook takes a new approach to the required information systems course for business majors. For each topic covered, the text highlights key "Take-Aways" that alert students to material they will need to remember during their careers. Sections titled "Where You Fit In" and "Why This Chapter Matters" explain how the topics being covered will impact students on the job. Review questions, discussion questions, and summaries are also included. This second edition is updated to include new technology, along with a new running case study.

Key features:

• Single-mindedly for business students who are not technical specialists
• Doesn't try to prepare IS professionals; other courses will do that
• Stresses the enabling technologies and application areas that matter the most today
• Based on the author's real-world experience
• Up to date regarding technology and tomorrow's business needs

This is the book the author—and, more importantly, his students—wishes he had when he started teaching. Dr. Mallach holds degrees in engineering from Princeton and MIT, and in business from Boston University. He worked in the computer industry for two decades, as Director of Strategic Planning for a major computer firm and as co-founder/CEO of a computer marketing consulting firm. He taught information systems in the University of Massachusetts (Lowell and Dartmouth) business schools for 18 years, then at Rhode Island College following his retirement. He consults in industry and serves as Webmaster for his community, in between hiking and travel with his wife.

1 Why Information Systems Matter in Business—And to You

Chapter Outline

1.1 The Value of Information

1.2 Systems and Information Systems

1.3 What Is Information, Really?

1.4 Legal and Ethical Information Use

Why This Chapter Matters

In 2020, computer literacy is a given. Every middle-school student is computer-literate, just as they all know how to read. This book won’t try to repeat what you’ve known for years.

Knowing how to read isn’t the same as understanding literature or poetry. Computer literacy isn’t the same as information literacy either. Middle-school students are computer-literate, but they are not information-literate. They don’t understand how information can benefit an organization, what affects its usefulness for that purpose, and how it should be managed to be as useful as possible. Middle-school students don’t have to understand that any more than they have to understand the structure of a play or the use of a metaphor—but college students who major in English do have to understand those things, so they study them. As a business student, and later in your career as a knowledge worker and as a manager, you have to be information-literate. That’s what this chapter is about.

Another way of looking at it: it’s the difference between “How do I use this?,” which you already know, and “How do I use this to make a difference?”

Chapter Take-Aways

As you read this chapter, focus on these key concepts to use on the job:

1. 1 Intelligent use of information can help any type of organization.
2. 2 The value of information depends on its quality. Information quality can be described by a few specific factors.
3. 3 Computers are basic to using information intelligently. A company can’t use information intelligently without using computer-based information systems intelligently.
4. 4 You will benefit personally in your career if you understand information systems.

1.1 The Value of Information

Consider these three business scenarios.

Scenario 1

A toy manufacturer gets an order for 5,000 wagons. It needs 20,000 wheels to produce them. It has only 4,000 wheels in stock. It must order at least 16,000 more wheels.

Possible Outcome A

The production control manager phones the purchasing agent who handles wheels. She’s out for the rest of the day, so the production control manager leaves a voice mail. When the purchasing agent returns the call the next morning, the production control manager is on the factory floor, so she leaves a voice mail. They talk the day after that. The purchasing agent then calls three suppliers from whom the toy manufacturer has bought wheels in the past. A is no longer in business. B’s sales representative has just left on a three-week vacation. She leaves a voice mail for C’s salesperson. The salesperson senses desperation in the purchasing agent’s message and quotes a price that is 25% higher than usual. C gets the order anyhow.

Possible Outcome B

The toy company’s production planning system calculates the need and sends an electronic message to the purchasing department. Workflow software in the purchasing department routes the request to the purchasing agent, but will reroute it to her manager if she doesn’t process it within 24 hours. She processes it the next morning, sending electronic Request for Bid messages to three firms that have supplied wheels in the past. She gets bids back from the two that are still in business. C quotes standard prices. B, whose sales rep is eager to close some business before leaving on a three-week vacation, offers a 20% discount. This time, B gets the order.

Scenario 2

A college professor enjoys solving puzzles and often buys puzzle books online. Two bookstores get a new puzzle book edited by Will Shortz, who is known for high-quality puzzles.

Possible Outcome A

Seller A prices the books at a discount to attract business. It puts them on a shelf and its web site, and waits for people to walk in and buy them or to order them online. Some do, but the professor doesn’t happen to visit the store or its site, so she doesn’t see it.

Possible Outcome B

Seller B keeps a list of people who have ordered books online in the past, indexed by category. It sends people who bought puzzle books an email to inform them of the new book. The professor orders the book from the store that sent her the email. She doesn’t feel like taking time to check other sources, so she doesn’t know the other store would sell it for $2 less.

Scenario 3

An athletic equipment store sells light-weight, impact-absorbing running socks for $10 per pair, of which $3.50 is its profit margin. The store’s owner figures that many people who buy running shoes could also use a pair of those socks, so he plans a sock promotion to tie in with shoe sales.

Possible Outcome A

The store offers running shoe buyers a coupon for $3 off a pair of these socks. Sock sales go up a lot. The manager decides to include a $3 sock coupon with every pair of running shoes they sell.

Possible Outcome B

The store tries three one-week experiments: coupons for $1, $2, and $3 off a pair of these socks. They plot sock sales as in Figure 1.1(a). They know sales volume is not their objective: they sell more socks with higher discounts, but they also make less profit per pair. They graph profit on socks as in Figure 1.1(b). Based on this information, the manager decides to include a $2 discount coupon with every pair of running shoes.

FIGURE 1.1 (a) Sock sales and (b) profit analysis.

What This Means

Think about these outcomes. In each scenario, which business will do better? The person or organization that uses information effectively is more likely to come out ahead. Information can be more important than product features: a product with less capability or a higher price can outsell a better one, if prospective buyers know what it can do and how it can be used.

These three scenarios illustrate the three main ways that information and information systems help companies succeed: linking parts of an organization, connecting organizations to customers and suppliers, and helping make better decisions. A chapter is devoted to each of these key concepts later in this book.

Effectiveness versus Efficiency

You just read that businesses should use information effectively. You’ve also heard people talk about efficiency. A businessperson must know the difference.

Effectiveness describes how well you achieve your objective. To measure effectiveness, you must know what that objective is.

Efficiency describes how much output you get from each unit of input. To measure efficiency, you must be able to measure input and output.

Example: You must choose between two software packages to prepare your income tax return. One is difficult to use, with complicated data entry procedures that must be followed precisely, and it can’t prepare your state return. However, it is very efficient: it runs quickly on your old, slow computer. The other has a much more modern interface, and can prepare returns for any U.S. state, so it gets the job done more effectively—but it runs slowly on your computer. It is inefficient. You would need to upgrade your computer or spend a lot of time waiting for it to complete its calculations. You must know your objectives and tradeoffs before choosing.

Why does this matter? With information systems, you are concerned with both effectiveness and efficiency. Ideally, you want both. However, there are often tradeoffs between them. Their relative importance can vary from one situation to the next. You must understand the difference between the two concepts to make those tradeoffs properly.

Where you fit in: These tradeoffs are business decisions. They shouldn’t be made on technical grounds. Technical factors are involved, but the final decision must be made by businesspeople such as you’ll be after you graduate.

1.2 Systems and Information Systems

The scenarios in Section 1.1, “The Value of Information,” used computers to improve a business outcome. Using computers is incidental. Computers are a technology that enables certain things to happen. What’s important in business is what happens. That’s where systems come in.

A system is a group of components that interact for a purpose. A transportation...