Business information systems
1. Business information systems, strategy and governance
1.1. What is an IS?
Why do we need IT?
- IT becomes a critical part of the company’s DNA
- Under pressure of digital disruption
- Companies can’t afford to work in the same old ways
- Technologies and processes are only becoming more sophisticated
- IT must join business to think systematically about how to phase in new digital technologies
Examples:
o Analytics (Amazon, Netflix → recommendations)
o Internet of things (Telematics → insurance controls your driving behavior, Moocall →
sensors for pregnant cow)
o Drones (storm damage insurance → reality of storm damage, package delivery, forest
maintenance)
o Self-driving cars
- We need business leaders with great IT capabilities in our age of digital, automation and AI
- Organizations should move from siloed business units and departments to all-encompassing
digital organizations
- Everyone needs to be involved with IT and speak the IT language
DATA – INFORMATION – KNOWLEDGE
- Data
o Raw observed facts of events like business transactions
o For example: raw facts, symbols, numbers, documents
- Information
o Processed data useful for decision making process, data are building blocks of
information
o Provides answers to “who, what, where and when” questions → context
- Knowledge
o Ability to perform certain tasks by combining data with own information and experience
For example:
- Data: 50109
- Information: 5/01/09, 50109 euro
Metadata
- = data about data
- For example: product number
o Metadata:
▪ Numerical
▪ Range between 1 and 9999
▪ Production department only one to assign product number
- Extensible markup language (XML)
o Tag based language to describe metadata
o User can define own tags
- Making data more comprehensible to humans and computers!
- Easy to share information between companies and/or people
,SYSTEMS
= “a set of elements. These elements are related to each other and possibly, to elements from the
universe of discourse and are joined for a specific purpose”
- Elements: physical objects, energetic units, biological units
- Relations: relations regarding distance and time, physical relations, logical relations
- Purposes: delivery of services, production of finished goods, …
Traffic system:
- Elements: road infrastructure, vehicles, person as driver or pedestrian or traffic agent, lanes,
traffic signs
- Relations: distances between cities, speed allowed in a specific place
- Purpose: optimizing traffic flow, maximizing safety
Description of systems dependent on purpose:
Traffic system:
o Car driver: drive from Leuven to Paris
o GPS: measure shortest distance
o Taxi driver: find pick up hot spots
BUSINESS OF INFORMATION SYSTEMS
= set of related components to collect, search,
process, store and distribute information in order to
support the coordination and control of decision-
making process within an organization (company,
government, non-profit organization…)
Business IT alignment:
- Use business information systems to realize
business objectives (profit, shareholder, value,
sustainability, etc.)
- Integrates IT into strategy, mission and goals of
company
Types of business information systems
- Strategic: long term decisions, on group level,
often based on unstructured information, what if
analysis
- Tactical: mid long-term decisions, identify executions plans for group decisions, project
management
- Operational: daily operations and decision, based on structured information, immediate
results
Sales and marketing
Order processing, pricing, forecasts
Production and logistics
Process control, planning, opening a new production unit
Finance and accountancy
Registration of financial transactions, short term budgeting, long term planning
Human resources
Registration recruitments and dismissal, distribution of pay scales, planning personnel needs
,Operational information systems
- Characteristics:
o Processes: well structured, unambiguous, routinely
o Decisions: short term, occur frequently, little uncertainties
o Users: clerks, cashiers, sales assistants
o Required information: easy to determinate, independent of individual, well-structured
and from within organization
- Examples:
o Online transaction processing systems (OLTP)
▪ Point of sales (POS) system – supermarket
▪ Order entry system – amazon, Deliveroo, etc.
▪ Financial transactions system – credit card
payments, paypal
o Enterprise resource planning (ERP)
▪ Single information system for organisation-wide
coordination and integration of business processes
▪ “Off the shelf” modules based on best practices
▪ “Plain vanilla” ERP vs customization
▪ Vendors (SAP, Oracle, Odoo)
Tactical information systems
- Characteristics
o Processes: less routinely
o Decisions: midterm, less often, more uncertainties/risks
o Users: middle management
o Required information: operational level + data warehouse, less easy to determine,
dependent of individual and moment, less well structured, need for external
information increases
- Examples:
o Management information systems (MIS)
▪ Input: transaction records, data warehouse
▪ Processing: routine reporting, low-level analysis
▪ Output: summary, exception reports
▪ Users: middle managers
, o Decision support systems (DSS)
▪ Management level → data analysis for decision making
▪ Input: data – low volume and data warehouses, analytical models, data analysis
tools
▪ Processing: interactive, simulation
▪ Output: special reports, decision analysis, answers to specific queries
▪ Users: middle and executive managers
▪ Credit scoring: decide to accept credit for a customer or not based on:
• Customer characteristics
• Loan characteristics
• Macro-economy
▪ Recommendation: decide which Amazon products to promote based on
• Previously bought products
• Reviews
• Time of year
Strategic information systems
- Characteristics
o Processes: unstructured, less unambiguous, occasionally
o Decisions: concerning long-term, rather incidental and irregular character, much
uncertainty and/or risk
o Users: C-level executives (CEO, CFO, CIO)
o Required information: very hard to determine, strongly dependent of individual, highly
less structured and occurs particularly in the company’s environment
- Examples
o Executive support systems (ESS)
▪ Communication and calculations at strategic level
▪ Input: external and internal aggregated data
▪ Processing: graphical, simulation, interactive
▪ Output: projections, answers to queries
▪ Users: top-level managers, board of directors
o Data warehousing, OLAP, data mining, web mining
Additional types of IS
- Office automation systems (OAS)
o Office automation
o Text processing, voicemail, e-mail, video conferencing, scheduling systems
- Knowledge work systems (KWS)
o Specialized systems for scientist, engineers, financial analysts and other knowledge
workers to obtain new knowledge
o Computer-aided design (CAD), virtual reality systems, stability, calculations
1. Business information systems, strategy and governance
1.1. What is an IS?
Why do we need IT?
- IT becomes a critical part of the company’s DNA
- Under pressure of digital disruption
- Companies can’t afford to work in the same old ways
- Technologies and processes are only becoming more sophisticated
- IT must join business to think systematically about how to phase in new digital technologies
Examples:
o Analytics (Amazon, Netflix → recommendations)
o Internet of things (Telematics → insurance controls your driving behavior, Moocall →
sensors for pregnant cow)
o Drones (storm damage insurance → reality of storm damage, package delivery, forest
maintenance)
o Self-driving cars
- We need business leaders with great IT capabilities in our age of digital, automation and AI
- Organizations should move from siloed business units and departments to all-encompassing
digital organizations
- Everyone needs to be involved with IT and speak the IT language
DATA – INFORMATION – KNOWLEDGE
- Data
o Raw observed facts of events like business transactions
o For example: raw facts, symbols, numbers, documents
- Information
o Processed data useful for decision making process, data are building blocks of
information
o Provides answers to “who, what, where and when” questions → context
- Knowledge
o Ability to perform certain tasks by combining data with own information and experience
For example:
- Data: 50109
- Information: 5/01/09, 50109 euro
Metadata
- = data about data
- For example: product number
o Metadata:
▪ Numerical
▪ Range between 1 and 9999
▪ Production department only one to assign product number
- Extensible markup language (XML)
o Tag based language to describe metadata
o User can define own tags
- Making data more comprehensible to humans and computers!
- Easy to share information between companies and/or people
,SYSTEMS
= “a set of elements. These elements are related to each other and possibly, to elements from the
universe of discourse and are joined for a specific purpose”
- Elements: physical objects, energetic units, biological units
- Relations: relations regarding distance and time, physical relations, logical relations
- Purposes: delivery of services, production of finished goods, …
Traffic system:
- Elements: road infrastructure, vehicles, person as driver or pedestrian or traffic agent, lanes,
traffic signs
- Relations: distances between cities, speed allowed in a specific place
- Purpose: optimizing traffic flow, maximizing safety
Description of systems dependent on purpose:
Traffic system:
o Car driver: drive from Leuven to Paris
o GPS: measure shortest distance
o Taxi driver: find pick up hot spots
BUSINESS OF INFORMATION SYSTEMS
= set of related components to collect, search,
process, store and distribute information in order to
support the coordination and control of decision-
making process within an organization (company,
government, non-profit organization…)
Business IT alignment:
- Use business information systems to realize
business objectives (profit, shareholder, value,
sustainability, etc.)
- Integrates IT into strategy, mission and goals of
company
Types of business information systems
- Strategic: long term decisions, on group level,
often based on unstructured information, what if
analysis
- Tactical: mid long-term decisions, identify executions plans for group decisions, project
management
- Operational: daily operations and decision, based on structured information, immediate
results
Sales and marketing
Order processing, pricing, forecasts
Production and logistics
Process control, planning, opening a new production unit
Finance and accountancy
Registration of financial transactions, short term budgeting, long term planning
Human resources
Registration recruitments and dismissal, distribution of pay scales, planning personnel needs
,Operational information systems
- Characteristics:
o Processes: well structured, unambiguous, routinely
o Decisions: short term, occur frequently, little uncertainties
o Users: clerks, cashiers, sales assistants
o Required information: easy to determinate, independent of individual, well-structured
and from within organization
- Examples:
o Online transaction processing systems (OLTP)
▪ Point of sales (POS) system – supermarket
▪ Order entry system – amazon, Deliveroo, etc.
▪ Financial transactions system – credit card
payments, paypal
o Enterprise resource planning (ERP)
▪ Single information system for organisation-wide
coordination and integration of business processes
▪ “Off the shelf” modules based on best practices
▪ “Plain vanilla” ERP vs customization
▪ Vendors (SAP, Oracle, Odoo)
Tactical information systems
- Characteristics
o Processes: less routinely
o Decisions: midterm, less often, more uncertainties/risks
o Users: middle management
o Required information: operational level + data warehouse, less easy to determine,
dependent of individual and moment, less well structured, need for external
information increases
- Examples:
o Management information systems (MIS)
▪ Input: transaction records, data warehouse
▪ Processing: routine reporting, low-level analysis
▪ Output: summary, exception reports
▪ Users: middle managers
, o Decision support systems (DSS)
▪ Management level → data analysis for decision making
▪ Input: data – low volume and data warehouses, analytical models, data analysis
tools
▪ Processing: interactive, simulation
▪ Output: special reports, decision analysis, answers to specific queries
▪ Users: middle and executive managers
▪ Credit scoring: decide to accept credit for a customer or not based on:
• Customer characteristics
• Loan characteristics
• Macro-economy
▪ Recommendation: decide which Amazon products to promote based on
• Previously bought products
• Reviews
• Time of year
Strategic information systems
- Characteristics
o Processes: unstructured, less unambiguous, occasionally
o Decisions: concerning long-term, rather incidental and irregular character, much
uncertainty and/or risk
o Users: C-level executives (CEO, CFO, CIO)
o Required information: very hard to determine, strongly dependent of individual, highly
less structured and occurs particularly in the company’s environment
- Examples
o Executive support systems (ESS)
▪ Communication and calculations at strategic level
▪ Input: external and internal aggregated data
▪ Processing: graphical, simulation, interactive
▪ Output: projections, answers to queries
▪ Users: top-level managers, board of directors
o Data warehousing, OLAP, data mining, web mining
Additional types of IS
- Office automation systems (OAS)
o Office automation
o Text processing, voicemail, e-mail, video conferencing, scheduling systems
- Knowledge work systems (KWS)
o Specialized systems for scientist, engineers, financial analysts and other knowledge
workers to obtain new knowledge
o Computer-aided design (CAD), virtual reality systems, stability, calculations
