Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (2023)

Part I: What is an information system?

learning goals

After successfully completing this chapter you will be able to:

  • define what an information system is by identifying its main components;
  • describe the basic history of information systems; Is
  • Describe the rationale behind the article "Is IT important?" by Nicolas Carr.

Welcome to the world of information systems, a world that seems to be changing almost every day. In the past few decades, information systems have evolved to the point where they are virtually everywhere, even to the point where you are not even aware of their existence in many of your day-to-day activities. Stop and think about how you interact with different components in information systems through different electronic devices every day. Smartphones, laptops, and PCs constantly connect us to a variety of systems, including messaging, banking, online retail, and academic resources, to name a few. Information systems are at the heart of virtually every organization and provide users with almost unlimited resources.

Have you ever thought about why companies invest in technology? Some buy computer hardware and software because everyone has computers. Some even invest in the same hardware and software as their business associates, even though another technology might be more suitable for them. Finally, some companies do sufficient research before deciding what best suits their needs. As you read this book, be sure to evaluate the content of each chapter for how you might one day apply what you have learned to strengthen the position of the company you work for, or perhaps even your own company. Wise decisions can lead to stability and growth for your future business.

Information systems surround you almost every day. Wi-Fi networks on your college campus, database lookup services at the learning resource center, and printers in computer labs are good examples. Every time you go shopping, you interact with an information system that manages inventory and sales. Driving to school or work also creates an interaction with the traffic information system in terms of traffic lights, cameras, etc. Vending machines connect and communicate over the Internet of Things (IoT). Your car's computer system doesn't just control the engine - acceleration, shifting and braking data is constantly being recorded. And of course, each smartphone is constantly connected to available networks via WiFi and records your location and other data.

(Video) BIS 3233 - Chapter 1: Introduction to Information Systems

Can you think of a few words to describe an information system? Words like "computers", "networks" or "databases" may come to mind. The study of information systems covers a wide range of devices, software and data systems. Defining an information system provides a solid start for this course and the content you are about to encounter.

Many business programs require students to take a courseinformation systems. Different authors have tried to define the term in different ways. Read through the following definitions and see if you can spot any variations.

  • "An information system (IS) can be technically defined as a set of interconnected components that collect, process, store and distribute information to support decision making and control in an organization."[1]
  • "Information systems are combinations of hardware, software, and telecommunications networks that people build and use to collect, create, and distribute useful data, usually in organizational settings."[2]
  • Information systems are interconnected components that work together to collect, process, store, and disseminate information to support decision making, coordination, control, analysis, and visualization in an organization.[3]

As you can see, these definitions focus on two different ways of describing information systems:componentswhich form an information system and whichPapierthese components play in an organization. Each of them must be examined.

Information systems consist of five main components: hardware, software, data, people and processes. The first three areTechnology. You probably thought of this when you defined information systems. The last two components, people and processes, separate the idea of ​​information systems from more technical fields like computer science. To fully understand information systems, you must understand how all of these components work together to create value for an organization.


Technology can be viewed as the application of scientific knowledge for practical purposes. From the invention of the wheel to the use of electricity for artificial lighting, technology has become ubiquitous in everyday life, ready for use anytime, anywhere. As discussed above, the first three components of information systems (hardware, software, and data) fall under the technology category. Each of them is dealt with in a separate chapter. Here is a simple introduction to help you understand.


Hardware is the tangible physical part of an information system, the part you can touch. Computers, keyboards, disk drives, and flash drives are examples of information system hardware. The way these hardware components work and work together is covered in Chapter 2.


Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (1)

Software includes the set of instructions that tell the hardware what to do. The software is not tangible, it cannot be touched. Programmers create software by writing a series of instructions that tell the hardware what to do. Two main categories of software are: operating systems and application software. The operating system software forms the interface between the hardware and the application software. Examples of operating systems for a PC are Microsoft Windows and Ubuntu Linux. The mobile operating system market is dominated by Google Android and Apple iOS. The application software allows the user to perform tasks such as creating documents, recording data in a spreadsheet, or sending messages to a friend. The software is discussed in more detail in Chapter 3.


The third technological component is data. You can think of data as a collection of facts. For example, your address (street, city, state, zip code), phone number, and social media account are data. Like software, data is immaterial and cannot be viewed in its original state. Independent dates are not very useful. But when aggregated, indexed and organized in a database, the data can become a powerful tool for businesses. Organizations collect all kinds of data and use it to make decisions whose effectiveness can be analyzed. The data analysis is then used to improve the organization's performance. Chapter 4 focuses on data and databases and how they are used in organizations.

communication network

In addition to the technological components (hardware, software and data), which have long been considered the core technology of information systems, it is proposed to add another component: communication. An information system can exist without the ability to communicate: The first personal computers were stand-alone machines that had no access to the Internet. However, in today's hyper-connected world, it's extremely rare that a computer won't connect to another device or network. Technically, the communication component of the network consists of hardware and software, but it is an essential characteristic of information systems that has become a category of its own. The network is covered in Chapter 5.

(Video) BIS 3233 - Chapter 1: Introduction to Information Systems


Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (2)

When thinking about information systems, it's easy to focus on the technology components and forget to look beyond those tools to fully understand their integration into an organization. The next step is to focus on the people involved in the information systems. From front-line customer service personnel to systems analysts, developers and the chief information officer (CIO), the people involved with information systems are critical. The person component is discussed in Chapter 9.


The last component of information systems is the process. A process is a series of steps that are performed to achieve a desired result or goal. Information systems are increasingly integrated into organizational processes, resulting in higher productivity and better control of these processes. However, it is not enough to simply use technology to automate activities: companies that want to reap the benefits of information systems must do more. The primary goal is to improve internal and external processes and improve interfaces with suppliers and customers. Technology buzzwords like "business process reengineering", "business process management" and "enterprise resource planning" revolve around the continuous improvement of these business processes and the integration of technology into them. Organizations looking to gain a competitive edge over their competitors focus heavily on this component of information systems. The process element in information systems is discussed in Chapter 8.

You should now understand that information systems have several important components, some tangible, some intangible, and some personal. These components collect, store, organize, and distribute data across the enterprise. You may even have noticed that one of the functions of information systems is to take data and turn it into information, and then turn that information into organizational knowledge. As technology has evolved, this function has become the backbone of the organization, making information systems an integral part of virtually every business. The integration of information systems in organizations has been progressing for decades.

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A mainframe era

From the late 1950s through the 1960s, computers were viewed as a way to perform computations more efficiently. These early commercial computers were room-sized monsters with multiple machines connected together. The main task was to organize and store large amounts of information that was tedious to handle manually. Only large corporations, universities and government agencies could afford them, and they hired a team of experts and special facilities to provide information to organizations.

time togetherIt allowed dozens or even hundreds of users to access mainframe computers simultaneously from locations in the same building or miles away. Typical functions included scientific calculations and bookkeeping, all under the broader umbrella of "data processing".

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Manufacturing Resource Planning (MRP) systems were introduced in the late 1960s. Running on a mainframe computer, this software gave companies the ability to manage the manufacturing process and make it more efficient. From inventory tracking to bill of materials generation to production planning, MRP systems have given more and more companies a reason to integrate computers into their processes. IBM became the dominant mainframe company. Continual improvement in software and the availability of cheaper hardware eventually brought mainframe computers (and their little brother, the minicomputer) into most large corporations.

Today you probably think of Silicon Valley in Northern California as the center of computing and technology. But at the time of mainframe dominance, companies in the cities of Minneapolis and St. Paul made most computers. The advent of the personal computer led to the shift from the "tech hub" to Silicon Valley.

The computer revolution

In 1975, the first microcomputer was advertised on the cover ofpopular mechanics: the Altair 8800. Its instant popularity captured the imagination of entrepreneurs around the world, and soon there were dozens of companies making these "personal computers". Although initially a niche product for computer enthusiasts, improvements in usability and the availability of useful software have led to increased sales. The most prominent of these early PC manufacturers was a small company called Apple Computer, run by Steve Jobs and Steve Wozniak with the successful Apple II. In order not to be excluded from the revolution, IBM partnered with Microsoft, then still a start-up, for its operating system software in 1981 and hastily released its own version of the personal computer, simply called "PC". Small businesses finally had affordable computers that could provide them with the information systems they needed. The popularity of the IBM PC gave legitimacy to the microcomputer and it got its nameTempoMagazine "Man of the Year" 1982.

Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (5)
(Video) Chapter 1 and 2 Business Information Systems

Because of the open architecture of the IBM PC, it was easy for other companies to copy or "clone" it. In the 1980s, many new computer companies emerged offering cheaper versions of the PC. This lowered prices and stimulated innovation. Microsoft developed the Windows operating system, with version 3.1 in 1992 becoming the first commercially successful release. Typical uses of the personal computer during this period included word processing, spreadsheets, and databases. These early personal computers were standalone machines that were not connected to a network.

customer server

By the mid-1980s, companies recognized the need to connect their computers to collaborate and share resources. Known as "client-server", this network architecture allowed users to log onto the local area network (LAN) from their PC (the "client") by connecting to a central computer called the "server". The server would look up the permissions for each user to determine who had access to various resources such as printers and files. Software companies began developing applications that allowed multiple users to access the same data at the same time. This evolved into software applications for communication, and the first popular use of email appeared around this time.

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This network and data sharing remained largely within the confines of each company. The exchange of electronic data between companies was a highly specialized function. Computers were now viewed as tools for internal collaboration within an organization. These computer networks became so powerful that they replaced many of the functions previously performed by larger mainframe computers at a fraction of the cost. At that time, the first ERP (Enterprise Resource Planning) systems were developed and ran on a client-server architecture. An ERP system is a centralized database application that can run all of a company's business. With separate modules for accounting, finance, inventory, human resources and more, ERP systems spearheaded by SAP Germany represented the ultimate information systems integration. ERP systems are covered in Chapter 9.

Internet, World Wide Web and E-Commerce

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The first long-distance transmission between two computers took place on October 29, 1969, when developers led by Dr. Leonard Kleinrock sent the word "login" from the UCLA campus to the Stanford Research Institute in Menlo Park, California, more than 350 miles away. The US Department of Defense created and funded the Advanced Research Projects Management (ARPA) Network, an experimental network that eventually became known as the Internet. ARPA Net started with just four nodes, or sites, a very humble beginning for today's Internet. Initially, the Internet was limited to use by universities, government agencies, and researchers. Users had to enter commands (we now call this the "command line") to communicate and transfer files. The first e-mail messages on the Internet were sent in the early 1970's when some very large companies extended their local area networks to the Internet. The computer now developed from a pure computing device into the world of digital communication.

In 1989, Tim Berners-Lee devised a simpler way for researchers to share information over the Internet, a concept he dubbed himselfWorld Wide Web.[4]This invention became the catalyst for the growth of the Internet as a way for businesses to share information about themselves. As web browsers and internet connections became the norm, companies rushed to get domain names and build websites.

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Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (9)In 1991, the National Science Foundation, which governed the use of the Internet, lifted restrictions on its commercial use. Corporations soon recognized the enormous potential of a digital marketplace on the Internet, and in 1994 eBay and Amazon were founded. Mad investments in Internet-based companies led to the dot-com boom of the late 1990s and then the dot-com bust of 2000. The bust came as investors, tired of seeing hundreds of companies making losses, abandoned their investments. An important result for the companies was that during this time thousands of kilometers of Internet connections in the form of fiber optic cables were laid worldwide. The world is truly "connected" to the new millennium, ushering in the era of globalization discussed in Chapter 11.This TED Talk video focuses on connecting Africa to the internetphaseroptisches Seekabel.

The digital world has also become a more dangerous place as virtually every business is connected to the internet. Computer viruses and worms, which once spread slowly through shared computer drives, can now spread over the Internet at tremendous speeds. Software and operating systems designed for an autonomous world found it very difficult to defend against these types of threats. A whole new industry of computer and internet security has emerged. Information security is covered in Chapter 6.

(Video) Introduction to Information Systems

Web 2.0

As the world was rocked by the dot-com crash, the use of technology in business evolved at a rapid pace. Websites have become interactive. Rather than simply visiting a website to learn more about a company and then purchasing its products, customers wanted to be able to personalize their experience and interact with the company online. This new breed of interactive sites, where you didn't need to know how to create a web page or code anything to put information online, became known as Web 2.0. This new tier of the web has been exemplified by blogs, social networking, and interactive commenting available on many websites. The new world of Web 2.0, where online interactions are expected, is having a tremendous impact on many companies and even entire industries. Many bookstores have been pushed into a niche. Video rental chains and travel agencies simply went out of business when replaced by online technologies. The newspaper industry has seen a huge decline in circulation as some cities, such as New Orleans, can no longer support a daily newspaper.
DisintermediationIt is the technology process that replaces an intermediary in a transaction. Web 2.0 allowed users to get information and news online, reducing reliance on physical books and newspapers.

As the world has become more connected, new questions have arisen. Should internet access be considered a right? Is it legal to copy a song downloaded from the internet? Can information entered on a website be kept confidential? What information may be collected from children? Technology has changed so rapidly that legislators have not had enough time to enact legislation. Ethical issues related to information systems are addressed in Chapter 12.

The post-PC world, so to speak

Ray Ozzie, a technology visionary at Microsoft, claimed in 2012 that computing was entering what he called the post-PC world.[5]Now, six years later, that prediction hasn't held up very well in reality. As you'll read in Chapter 13, PC sales have declined slightly in recent years, while tablet sales have plummeted. Smartphone sales have accelerated, largely due to their portability and ease of use. Like the mainframe before it, the PC will continue to play a key role in business, but its role will diminish somewhat as people emphasize mobility as a core feature of the technology. Cloud computing allows users mobile access to data and applications, making the PC part of the communication channel rather than a repository of programs and information. Innovations in the development of technology and communication will continue to drive the business forward.

Epochs of corporate informatics
ErasHardwareoperating systemto form
main frame
Terminals connected to the central computertime together
(TSO) in Multiple Virtual Storages (MVS)
Software needs planning
personal computer
(mid 80's)
IBM PC or compatible. Sometimes via connected to the central computer
Network card.
MS-DOSperfect word,
Herz 1-2-3
customer server
(late 80's early 90's)
"Clone" IBMPC on a Novell network.Windows for workgroupsMicrosoft
Word Excel
Wide Web (mid 1990s to early 2000s)
"Clone" an IBMPC connected to the corporate intranet.Windows XPMicrosoft
Office, Internet Explorer
Web2.0 (mid 2000s - present)Laptop connected to company WiFi.Windows10Microsoft
(today and beyond)
SmartphonesAndroide iOSMobile friendly
websites, mobile applications

It was always assumed that the implementation of information systems would give the company a competitive advantage. If installing one inventory management computer can make a business more efficient, installing multiple computers can be expected to improve business processes and efficiency.

In 2003, Nicholas Carr wrote an article inHarvard Business Reviewwho disputed this assumption. Under the title "I. T. It doesn't matter. Carr was concerned that information technology had become a mere commodity. Rather than viewing technology as an investment that differentiates a business, Carr said technology would become as commonplace as electricity, something that needs to be managed to keep costs down, ensure it's always on, and that it's always as risk-free as is possible.

The article was both celebrated and despised. Does HE give a company a competitive advantage? It sure worked for Walmart (see sidebar). Technology and competitive advantage are discussed in Chapter 7.

Chapter 1: What is an information system? - Information Systems for Businesses and Beyond (2019) (10)

Walmart is the world's largest retailer and deserves it8.1 billion for the fiscal year ended January 31, 2018. Walmart currently serves more than 260 million customers around the world each week through its 11,700 stores in 28 countries.[6]In 2018, Fortune magazine ranked Walmart as the number one company for annual sales for the sixth straight year, as it again surpassed $500 billion in annual sales. The closest company, Exxon, had less than half of Walmart's total revenue.[7]The rise of Walmart is due in large part to the high priority given to information systems, specifically the supply chain management (SCM) system known as Retail Link.$14.3 billion in sales of $30

This system, first implemented in the mid-1980s, gave Walmart suppliers direct access to inventory and sales information for their products at each of Walmart's more than 11,000 stores. With Retail Link, suppliers can analyze how their products are selling in one or more Walmart stores with a variety of reporting options. Additionally, Walmart requires vendors to use Retail Link to manage their own inventory. If a supplier feels their products are selling out too quickly, they can use Retail Link to ask Walmart to increase inventory on their products. This essentially allowed Walmart to "hire" thousands of product managers, all interested in the products they managed. This revolutionary approach to inventory management has allowed Walmart to continue lowering prices and responding quickly to market forces.

Today, Walmart continues to innovate with information technology. With its massive market presence, any technology that Walmart needs to implement from its suppliers immediately becomes a business standard. For example, in 1983, Walmart became the first major retailer to require its suppliers to use UPC (Uniform Product Code) labels on all products. Walmart has clearly learned how to handle IT. to gain a competitive advantage.

(Video) Business Information Systems Sagar Jain

This chapter introduced you to the concept of information systems. Several definitions focused on the main components: technology, people and processes. You've seen how the business use of information systems has evolved over the years, from the use of large mainframe computers to crunch numbers, through the advent of the personal computer and networking, to the mobile computing age. In each of these phases, new software and technology innovations enabled companies to integrate technology more deeply into their organizations.

Almost all businesses use information systems, which begs the question: do information systems provide a competitive advantage? Ultimately, this book aims to help you understand the importance of information systems in making an organization more competitive. Your challenge is to understand the key components of an information system and how it can be used to provide a competitive advantage to any organization you serve in your career.

  1. What are the five main components of an information system?
  2. Give three examples of information system hardware.
  3. Microsoft Windows is an example of which information system component?
  4. What is application software?
  5. What role do people play in information systems?
  6. What is the definition of a process?
  7. Which was invented first, the personal computer or the internet?
  8. In what year were restrictions on commercial internet use first lifted?
  9. What is Carr's main argument about information technology?
  1. Suppose you need to explain the concept of an information system to a friend. How would you define it? Write a one-paragraph descriptionin his own wordswhat you think would best describe an information system to your friends or family.
  2. In your opinion, which of the five main components of an information system (hardware, software, data, people, processes) is most important for the success of a business organization? Write a one-line answer to this question, including an example from your personal experience to support your answer.
  3. We all interact with different information systems on a daily basis: at the grocery store, at work, at school, even in our cars. Make a list of the different information systems you interact with on a daily basis. Can you identify the technologies, people, and processes involved in making these systems work?
  4. Do you agree that we are in a post-PC phase in the development of information systems? Do your own research and cite it when making your prediction of what next-generation enterprise computing will be like.
  5. The Walmart sidebar has shown you how information systems have been used to make Walmart the world's number one retailer. Walmart continued to innovate and is still recognized as a leader in the use of technology. Conduct original research and write a one-page report describing a new technology that Walmart has recently implemented or developed.
  1. Scan your PC. Using a four-column spreadsheet format, identify and record the following information: 1st column: program name, 2nd column: software manufacturer, 3rd column: software version, 4th column: software type (text editor/processor, spreadsheet, database, etc.). .).
  2. Check your cell phone. Create another four-column table similar to that in Lab #1. This time, identify the applications and record the information requested.
  3. In this chapter you will read about the development of data processing from mainframe computers to PCs and smartphones. Create a four-column table and enter the following information about your own electronic devices: 1st column – type: PC or smartphone, 2nd column – operating system including version, 3rd column – storage capacity, 4th column – available storage space.
  1. Laudon , KC and Laudon , JP . (2014)information management systems, thirteenth edition. Upper Saddle River, NJ: Pearson.
  2. Valacich, J. and Schneider, C. (2010).Information systems today: management in the digital world, vierte Edition. Upper Saddle River, NJ: Prentice-Hall.
  3. Laudon, K.C. und Laudon, J.P. (2012).information management systems, twelfth edition. Upper Saddle River, NJ: Prentice Hall.
  4. CERN. (nd) The Birth of the Internet. Retrieved from
  5. Marquis, J. (2012 July 16) What is the post-PC world?online universities. com.Retrieved from
  6. Walmart. (undated) Annual Report 2017. Retrieved from
  7. McCoy, K. (2018, May 21). Big winners in the Fortune 500 list.United States today. Received at


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