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QUESTION
a. With relevant examples, discuss the different applications of information systems in the business world
b. What is the contributions/impacts of the internet to the dynamic business world
- Application of information systems in the business world
The different types of information system that can be found are identified through a process of classification. Classification is simply a method by which things can be categorized or classified together so that they can be treated as if they were a single unit. There is a long history of classification of things in the natural world such as plants or animals, however, Information systems are not part of the 'natural' world; they are created and acquired by man to deal with particular tasks and problems.
The classification of information systems into different types is a useful technique for designing systems and discussing their application; it not however a fixed definition governed by some natural law. A 'type' or category of information system is simply a concept, an abstraction, which has been created as a way to simplify a complex problem through identifying areas of commonality between different things. One of the oldest and most widely used systems for classifying information systems is known as the pyramid model; this is described in more detail below.
Four level pyramid model based on the different levels of hierarchy in the organization
Using the four level pyramid model above, we can now compare how the information systems in our model differ from each other.
- Transaction Processing Systems Transaction Processing System are operational-level systems at the bottom of the pyramid. They are usually operated directly by shop floor workers or front line staff, which provide the key data required to support the management of operations. This data is usually obtained through the automated or semi- automated tracking of low-level activities and basic transactions.
Functions of a TPS TPS are ultimately little more than simple data processing systems.
Functions of a TPS in terms of data processing requirements Inputs Processing Outputs Transactions Events
Validation Sorting Listing Merging Updating Calculation
Lists Detail reports Action reports Summary reports?
Some examples of TPS
- Payroll systems
- (^) Order processing systems
- Reservation systems
- Stock control systems
- Decision Support Systems A Decision Support System can be seen as a knowledge based system, used by senior managers, which facilitates the creation of knowledge and allow its integration into the organization. These systems are often used to analyze existing structured information and allow managers to project the potential effects of their decisions into the future. Such systems are usually interactive and are used to solve ill structured problems. They offer access to databases, analytical tools, allow "what if" simulations, and may support the exchange of information within the organization.
Functions of a DSS DSS manipulate and build upon the information from a MIS and/or TPS to generate insights and new information.
Functions of a DSS in terms of data processing requirements
Inputs Processing Outputs
Internal Transactions Internal Files External Information?
Modelling Simulation Analysis Summarizing
Summary reports Forecasts Graphs / Plots
Some examples of DSS
- Group Decision Support Systems (GDSS)
- Computer Supported Co-operative work (CSCW)
- Logistics systems
- Financial Planning systems
- Spreadsheet Models? The role of DSS
- Support ill- structured or semi-structured decisions
- Have analytical and/or modelling capacity
- Used by more senior managerial levels
- (^) Are concerned with predicting the future
- Are effectiveness oriented?
- Executive Information Systems
Executive Information Systems are strategic-level information systems that are found at the top of the Pyramid. They help executives and senior managers analyze the environment in which the organization operates, to identify long-term trends, and to plan appropriate courses of action. The information in such systems is often weakly structured and comes from both internal and external sources. Executive Information System are designed to be operated directly by executives without the need for intermediaries and easily tailored to the preferences of the individual using them. Functions of an EIS EIS organizes and presents data and information from both external data sources and internal MIS or TPS in order to support and extend the inherent capabilities of senior executives.
Functions of a EIS in terms of data processing requirements
Inputs Processing Outputs
External Data Internal Files Pre-defined models
Summarizing Simulation "Drilling Down"
Summary reports Forecasts Graphs / Plots Some examples of EIS Executive Information Systems tend to be highly individualized and are often custom made for a particular client group; however, a number of off-the-shelf EIS packages do exist and many enterprise level systems offer a customizable EIS module. The role of EIS
- Are concerned with ease of use
- Are concerned with predicting the future
- Are effectiveness oriented
- (^) Are highly flexible
- Support unstructured decisions
- Use internal and external data sources
- Used only at the most senior management level
The Internet has eased the conditions of investing. It’s easier to track the profits of businesses and research factors from the news that may affect a business. The Internet has opened investing to more participants. Consumers can invest in businesses that they may not have discovered without the Internet. Stocks are being purchased over the Internet without the assistance of a broker.
Real Estate
Buying a home online has become possible. While very few people would want to buy a home without seeing it in person, having house listings online helps reduce the time it takes to purchase a home. People can narrow down which houses that they are actually interested in viewing by seeing their description and picture online. After a house is chosen, potential buyers can also apply for a mortgage online. No longer are buyers be restricted to local lending institutions, since many lenders will be able to compete online for business.
Ordering products.
Ordering products online is an important application. many companies are setting up Web pages to actually do this. Customers can actually order online if they choose to do so. They can even send their credit card number over the network. Since this is non-secure, most people probably still call the company to order any item.
"Chat" Internet Telephone
Today many businesses have direct contact with their customers/clients where they offer customer services. Companies offer off site information, user guides/manual, simple troubleshooting about their products.
Video Conferencing
On the other hand, businesses are using video to communicate with others. There are some applications that multinational businesses use to help set up video conferencing. This is very important because it enables companies share demonstrations on concepts and real live imagery of different items/products within a short period of time and saving on transport costs
Share Company Information
Commercial companies are now using the Web for many purposes. One of the first ways that commercial companies used the Web was to share information with their employees. Inform employees about such things as training schedules and company goals. There is also some information which is company private and access is restricted to company employees only.
Despite the massive amount of business is done over the Internet, in certain fields or situations, the Internet is simply bad for business.
Bricks vs. Clicks
Since the late 1990s, Internet retailers have seen rapid growth in their businesses, both in terms of customer volume and total online sales. Of course, not all of these Internet sales represent new customers and new money. The vast majority come at the expense of traditional retailers, who have seen sales decline in accordance with the rise of online shopping. For sellers who maintain both retail locations
("bricks") and an online store ("clicks"), the pressure is on to find a balance between customers who prefer a traditional shopping experience and those who appreciate the convenience of using the Internet.
New Competitors
The Internet also brings new competitors to many areas of business. It is within the ability of just about anyone to offer his products or services online through any number of selling venues, thus adding literally millions of new merchants to the global marketplace. For existing businesses, these new online sellers represent a challenge to retain customers or risk being driven out of business.
Additionally, the Internet removes the restrictions of geography. Shopping locally is no longer the only choice, and goods can be ordered from anywhere. Smaller businesses need only create a website to expand their customer bases to everyone with Internet access rather than being restricted by a local or regional market.
Obsolescence
Certain products and services are quickly becoming obsolete in the digital age, including stock brokers, travel agents and even the post office. They have been largely replaced by stock websites, travel websites and e-mail, respectively. While some companies have spotted these trends before they occurred and offered online services to augment their business model, others have been left with a depleted customer base.
Automation on the Internet also has eliminated countless jobs. As businesses use the Internet to simplify and streamline their operations, there is less need for a large labor force. For cases in which an automated online system can sort data or answer customers' questions, the human element is sometimes deemed unnecessary.
Security
For all of the business conducted online, security and confidentiality become major concerns. Each year, millions of dollars are spent on security efforts to ensure that transactions are safe and that customers will feel comfortable conducting business online.
Beyond day-to-day transactions, major security threats such as hackers, viruses, and e-terrorism mean that providing security online means an added expenditure that simply doesn't exist elsewhere. Breaches of security, such as the highly publicized theft of credit card data on several occasions, lead customers to question the safety of doing business online, which can hurt business further by lowering confidence levels.
Lost Productivity
One final way in which the Internet is bad for business doesn't concern the business that happens online at all. Instead, it relates to lost productivity due to employees using the Internet at work. Estimates vary, but it is agreed that American workers spend a substantial amount of their workday replying to personal e- mail, following live sporting events and web surfing. Even for scenarios in which employees are not equipped with computers, the availability of wireless Internet on phones and other mobile devices creates a constant swarm of distraction that can cut into work time. Many employers have taken steps to regulate their employees' Internet usage, but concerns about privacy and legality linger.
