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2.1: Information Systems

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    79611
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    Defining Information Systems

    Almost all programs in business require students to take a course in something called information systems. But what exactly does that term mean? Let’s take a look at some of the more popular definitions, first from Wikipedia and then from a couple of textbooks:

    • “Information systems (IS) is the study of complementary networks of hardware and software that people and organizations use to collect, filter, process, create, and distribute data.”[1]

      In some organizations, a matrix reporting structure was developed in which IT personnel were placed within a department and reported to both the department management and the functional management within IS. The advantages of dedicated IS personnel for each department must be weighed against the need for more control over the strategic information resources of the company.

    • “Information systems are combinations of hardware, software, and telecommunications networks that people build and use to collect, create, and distribute useful data, typically in organizational settings.”[2]
    • “Information systems are interrelated components working 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: the components that make up an information system and the role that those components play in an organization. Let’s take a look at each of these.

    The Role of Information Systems

    In this section, we will explore the role information systems play in an organization. Later in the text, you will learn how components collect, store, organize and distribute data throughout the organization. In fact, we might say that one of the roles of information systems is to take data and turn it into information, and then transform that into organizational knowledge. As technology has developed, this role has evolved into the backbone of the organization. To get a full appreciation of the role information systems to play, we will review how they have changed over the years.

    IBM 704 Mainframe
    Figure \(\PageIndex{1}\):  IBM 704 Mainframe (CC-BY; Lawrence Livermore National Laboratory)

    The Mainframe Era

    From the late 1950s through the 1960s, computers were seen as a way to more efficiently do calculations. These first business computers were room-sized monsters, with several refrigerator-sized machines linked together. The primary work of these devices was to organize and store large volumes of information that were tedious to manage by hand. Only large businesses, universities, and government agencies could afford them, and they took a crew of specialized personnel and specialized facilities to maintain. These devices served dozens to hundreds of users at a time through a process called time-sharing. Typical functions included scientific calculations and accounting, under the broader umbrella of “data processing.”

    IBM corporate logo

    Registered trademark of International Business Machines

    In the late 1960s, the Manufacturing Resources Planning (MRP) systems were introduced. This software, running on a mainframe computer, gave companies the ability to manage the manufacturing process, making it more efficient. From tracking inventory to creating bills of materials to scheduling production, the MRP systems (and later the MRP II systems) gave more businesses a reason to want to integrate computing into their processes. IBM became the dominant mainframe company. Nicknamed “Big Blue,” the company became synonymous with business computing. Continued improvement in software and the availability of cheaper hardware eventually brought mainframe computers (and their little sibling, the minicomputer) into most large businesses.

    The PC Revolution

    In 1975, the first microcomputer was announced on the cover of Popular Mechanics: the Altair 8800. Microcomputers' immediate popularity sparked the imagination of entrepreneurs everywhere, and there were quickly dozens of companies making these “personal computers.” Though at first just a niche product for computer hobbyists, improvements in usability and the availability of practical software led to growing sales. The most prominent of these early personal computer makers was a little company known as Apple Computer, headed by Steve Jobs and Steve Wozniak, with the hugely successful “Apple II.” Not wanting to be left out of the revolution, in 1981 IBM (teaming with a little company called Microsoft for their operating-system software) hurriedly released their own version of the personal computer, simply called the “PC.” Businesses, who had used IBM mainframes for years to run their businesses, finally had the permission they needed to bring personal computers into their companies, and the IBM PC took off. The IBM PC was named Time magazine’s “Man of the Year” for 1982.

    Because of the IBM PC’s open architecture, it was easy for other companies to copy, or “clone” it. During the 1980s, many new computer companies sprung up, offering less expensive versions of the PC. This drove prices down and spurred innovation. Microsoft developed its Windows operating system and made the PC even easier to use. Common uses for the PC during this period included word processing, spreadsheets, and databases. These early PCs were not connected to any sort of network; for the most part, they stood alone as islands of innovation within the larger organization.

    Client-Server

    In the mid-1980s, businesses began to see the need to connect their computers together as a way to collaborate and share resources. This networking architecture was referred to as “client-server” because users would log in to the local area network (LAN) from their PC (the “client”) by connecting to a powerful computer called a “server,” which would then grant them rights to different resources on the network (such as shared file areas and a printer). Software companies began developing applications that allowed multiple users to access the same data at the same time. This evolved into software applications for communicating, with the first real popular use of electronic mail appearing at this time.

    This networking and data sharing all stayed within the confines of each business, for the most part. While there was sharing of electronic data between companies, this was a very specialized function. Computers were now seen as tools to collaborate internally, within an organization. In fact, these networks of computers were becoming so powerful that they were replacing many of the functions previously performed by the larger mainframe computers at a fraction of the cost. It was during this era that the first Enterprise Resource Planning (ERP) systems were developed and run on the client-server architecture. An ERP system is a software application with a centralized database that can be used to run a company’s entire business. With separate modules for accounting, finance, inventory, human resources, and many, many more, ERP systems, with Germany’s SAP leading the way, represented the state of the art in information systems integration.

    The World Wide Web and E-Commerce  

    First invented in 1969, the Internet was confined to use by universities, government agencies, and researchers for many years. Its rather arcane commands and user applications made it unsuitable for mainstream use in business. One exception to this was the ability to expand electronic mail outside the confines of a single organization. While the first e-mail messages on the Internet were sent in the early 1970s, companies who wanted to expand their LAN-based e-mail started hooking up to the Internet in the 1980s. Companies began connecting their internal networks to the Internet in order to allow communication between their employees and employees at other companies. It was with these early Internet connections that the computer truly began to evolve from a computational device to a communications device.

    WWW_logo_by_Robert_Cailliau.svg.png

    Figure \(\PageIndex{2}\): The historic World Wide Web logo, designed by Robert Cailliau. (1990; Robert Cailliau)

     

    In 1989, Tim Berners-Lee developed a simpler way for researchers to share information over the network at CERN laboratories, a concept he called the World Wide Web.[4] This invention became the launching point of 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 grab domain names and create websites.

    clipboard_e0bc6ec1733c162b0138e55afa8a07c73.png
    Figure \(\PageIndex{3}\):  The CERN data centre in 2010 housing some WWW servers.  The CERN datacenter with World Wide Web and Mail servers. The rear of the equipment racks are exposed to the room, indicating cold aisle containment is being practiced.

    In 1991, the National Science Foundation, which governed how the Internet was used, lifted restrictions on its commercial use. The year 1994 saw the establishment of both eBay and Amazon.com, two true pioneers in the use of the new digital marketplace. A mad rush of investment in Internet-based businesses led to the dot-com boom through the late 1990s, and then the dot-com bust in 2000. While much can be learned from the speculation and crazy economic theories espoused during that bubble, one important outcome for businesses was that thousands of miles of Internet connections were laid around the world during that time. The world became truly “wired” heading into the new millennium, ushering in the era of globalization.

    As it became more expected for companies to be connected to the Internet, the digital world also became a more dangerous place. Computer viruses and worms, once slowly propagated through the sharing of computer disks, could now grow with tremendous speed via the Internet. Software written for a disconnected world found it very difficult to defend against these sorts of threats. A whole new industry of computer and Internet security arose.                              

                                                                                                  

    Web 2.0

    As the world recovered from the dot-com bust, the use of technology in business continued to evolve at a frantic pace. Websites became interactive; instead of just visiting a site to find out about a business and purchase its products, customers wanted to be able to customize their experience and interact with the business. This new type of interactive website, where you did not have to know how to create a web page or do any programming in order to put information online, became known as web 2.0. Web 2.0 is exemplified by blogging, social networking, and interactive comments being available on many websites. This new web-2.0 world, in which online interaction became expected, had a big impact on many businesses and even whole industries. Some industries, such as bookstores, found themselves relegated to niche status. Others, such as video rental chains and travel agencies, simply began going out of business as they were replaced by online technologies. This process of technology replacing a middleman in a transaction is called disintermediation.

    As the world became more connected, new questions arose. Should access to the Internet be considered a right? Can I copy a song that I downloaded from the Internet? How can I keep information that I have put on a website private? What information is acceptable to collect from children? Technology moved so fast that policymakers did not have enough time to enact appropriate laws, making for a Wild West–type atmosphere.

    The Post-PC World

    After thirty years as the primary computing device used in most businesses, sales of the PC are now beginning to decline as sales of tablets and smartphones are taking off. Just as the mainframe before it, the PC will continue to play a key role in business, but will no longer be the primary way that people interact and do business. The limited storage and processing power of these devices is being offset by a move to “cloud” computing, which allows for storage, sharing, and backup of the information on a massive scale. This will require new rounds of thinking and innovation on the part of businesses as technology continues to advance.

    The Eras of Business Computing
    Era Hardware Operating System Applications
    Mainframe
    (1960s)
    Terminals connected to mainframe computer. Time-sharing
    (TSO) on MVS
    Custom-written
    MRP software
    PC
    (mid-1980s)
    IBM PC or compatible. Sometimes connected to mainframe computer via
    expansion card.
    MS-DOS WordPerfect,
    Lotus 1-2-3
    Client-Server
    (late 80s to early 90s)
    IBM PC “clone” on a Novell Network. Windows for Workgroups Microsoft
    Word, Microsoft Excel
    World
    Wide Web (mid-90s to early 2000s)
    IBM PC “clone” connected to company intranet. Windows XP Microsoft
    Office, Internet Explorer
    Web 2.0 (mid-2000s to present) Laptop connected to company Wi-Fi. Windows 7 Microsoft
    Office, Firefox
    Post-PC
    (today and beyond)
    Apple iPad iOS Mobile-friendly
    websites, mobile apps

    Information Systems Users – Types of Users

    Besides the people who work to create, administer, and manage information systems, there is one more extremely important group of people, namely, the users of information systems. This group represents a very large percentage of an organization’s employees. If the user is not able to successfully learn and use an information system, the system is doomed to failure.

    Technology adoption user types

    Chart showing the adoption rates of different types of users
    Diffusion of Innovation 

    One tool that can be used to understand how users will adopt a new technology comes from a 1962 study by Everett Rogers. In his book, Diffusion of Innovation,[1]Rogers studied how farmers adopted new technologies and noticed that the adoption rate started slowly and then dramatically increased once adoption hit a certain point. He identified five specific types of technology adopters:

    • Innovators. Innovators are the first individuals to adopt new technology. Innovators are willing to take risks, are the youngest in age, have the highest social class, have great financial liquidity, are very social, and have the closest contact with scientific sources and interaction with other innovators. Risk tolerance is high so there is a willingness to adopt technologies that may ultimately fail. Financial resources help absorb these failures (Rogers, 1962, p. 282).
    • Early adopters. The early adopters are those who adopt innovation soon after a technology has been introduced and proven. These individuals have the highest degree of opinion leadership among the other adopter categories, which means that these adopters can influence the opinions of the largest majority. Characteristics include being younger in age, having a higher social status, possessing more financial liquidity, having advanced education, and being more socially aware than later adopters. These adopters are more discrete in adoption choices than innovators, and realize the judicious choice of adoption will help them maintain a central communication position (Rogers, 1962, p. 283).
    • Early majority. Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than the innovators and early adopters. This group tends to be slower in the adoption process, has above average social status, has contact with early adopters, and seldom holds positions of opinion leadership in a system (Rogers, 1962, p. 283).
    • Late majority. The late majority will adopt an innovation after the average member of the society. These individuals approach an innovation with a high degree of skepticism, have below average social status, very little financial liquidity, are in contact with others in the late majority and the early majority, and show very little opinion leadership.
    • Laggards. Individuals in this category are the last to adopt an innovation. Unlike those in the previous categories, individuals in this category show no opinion leadership. These individuals typically have an aversion to change agents and tend to be advanced in age. Laggards typically tend to be focused on “traditions,” are likely to have the lowest social status and the lowest financial liquidity, be the oldest of all other adopters and be in contact with only family and close friends.[2]

    These five types of users can be translated into information technology adopters as well, and provide additional insight into how to implement new information systems within the organization. For example, when rolling out a new system, IT may want to identify the innovators and early adopters within the organization and work with them first, then leverage their adoption to drive the rest of the implementation to the other users.

    New Models of Organizations

    The integration of information technology has influenced the structure of organizations. The increased ability to communicate and share information has led to a “flattening” of the organizational structure due to the removal of one or more layers of management.

    The network-based organizational structure is another change enabled by information systems. In a network-based organizational structure, groups of employees can work somewhat independently to accomplish a project. People with the right skills are brought together for a project and then released to work on other projects when that project is over. These groups are somewhat informal and allow for all members of the group to maximize their effectiveness.


    2.1: Information Systems is shared under a CC BY license and was authored, remixed, and/or curated by LibreTexts.

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