1.

Information systems, strategy

and governance
Lecture 1: What is an IS?
Prof. Dr. Jochen De Weerdt
 Lecture overview

1. Motivation
2. What is an IS?
3. Types of information systems

2
 Why do we teach this course?*
*for the not-informatics students

Why do you need to know anything about IT ?

Can’t we leave IT to the IT-people ?

3
 An opinion from McKinsey
• The digital future of work: What will automation change?
 http://www.mckinsey.com/Videos/video?vid=5511848358001&
plyrid=HkOJqCPWdb
 An additional interesting reading: “Do we understand the impact of
AI on employment?” – http://bruegel.org/2017/04/do-we-
understand-the-impact-of-artificial-intelligence-on-employment/

• Modernizing IT for a digital era

 http://www.mckinsey.com/business-functions/digital-
mckinsey/our-insights/modernizing-it-for-a-digital-era
• Culture for a digital age
 http://www.mckinsey.com/business-functions/digital-
mckinsey/our-insights/culture-for-a-digital-age

4
 Key learnings:
“Modernizing IT for a digital era”
• Incrementalism vs. end-to-end modernization
 IT becomes a critical part of the company’s DNA
 Under pressure of digital disruption
• Executives face three critical steps for end-to-end
modernization
 Define target state of the IT architecture
 Decide which systems, people, and processes need to change
 Determine sequence and scope of these changes
• 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
5
 Key learnings:
“Culture for a digital age”

Cultural deficiencies
- Functional and departmental silo’s
- A fear of taking risks
- Acting on a single view of the customer

6
 Conclusion
• We need business leaders with great IT capabilities in our
age of digital, automation, and artificial intelligence
• Organizations should move from siloed business units
and departements to all-encompassing digital
organizations
 Under pressure from digital disruption
 Look at industries like banking, fashion, news, wholesales, …
 Organizational culture and skill-set needs to change as well
• Everyone, regardless of his or her role, will need to be
involved with designing and implementing digital
technologies for which information systems are the basis
7
 So: why are you here?
• In your future job, you cannot just leave IT to the IT people!
• This course will provide you with a starting point to
 understand the necessity of Business-IT alignment and how IT can create
value for an organisation
 understand the fundamentals of Enterprise Architecture so as to be able
to collaborate with IT people
 be able to understand and explain business process models
 be able to understand and develop information models that can be used
for design of databases
 be able to retrieve data from a database with SQL
 understand the importance and key concepts of business intelligence
 understand how big data analytics is changing the business landscape and
how some basic data analytics techniques work
 understand how the internet and web technologies are changing business
models, value chains, and create massive opportunities
8
But, this course = bird’s eye view on IS
D0I62A
Principles of
database
management

D0H56A D0I68A
Requirements Business
Engineering Analysis

D0H27A/
D0T12A
Business
D0I71A
D0I69A Information Architecture
ICT Service Systems and
Management Modelling of
MIS

D0I74A
D0I80A
Knowledge
Business
Management
Process
and Business
Management
Intelligence 9
2. What is an IS?

10
 What is a business information system?

• What is “information”?

• What is a “system”?

• What is a “business information system”?

11
What is information?

12
 Data vs. information
• Data
 raw observed facts of events like business transactions:
“symbolic” representation of facts.
 e.g. raw facts, symbols, numbers, documents…
• Information
 processed data useful for the decision making process; data
are the building blocks of information;
 provides answers to “who”, “what”, “where”, and “when”
questions  context
• Knowledge
 ability to perform certain tasks by combining data with own
information and experience.

13
 Data or
information?

Knowledge and
information are personal,
one person’s information is
merely data for another
unless a meaning is put on
it!

14
 Data versus Information
• Data: 50109
• Information:
 5/01/09: Date of exam
 €50,109: The wage of an employee of KU Leuven
 50109: Zip code of Granger, Iowa, USA
 50109: Zip code of Alpartir, Spain
 Etc…

15
Data versus Information (in businesses)
• Data: raw observed facts of events like business
transactions
• Information: processed data useful for the decision
making process

Data Information
331 Soap1.29 Sales Region: North west
863 Coffee 4.69 Store: Store #122
173 Milk 79
331 Soap 1.29 Item No. Description Items sold Turnover
663 Ham 3.29 331 Soap 7156 9231,24
524 Mustard 1.49
113 Beer .85
…
16
Context through metadata information
• Metadata information = information about
data/information (often referred to as “metadata”)
• Example: “prodnr”
 Information about this data:
 The fact that prodnr is numerical;
 The fact that the values of prodnr have a range between 1 and
9999;
 The fact that the production department assigns the product
numbers;
 Etc…

17
Metadata information example: Dublin Core

• Dublin Core
 standard developed to describe electronic sources to improve
the traceability of documents.
 Title, author, subject, description, publisher
 Date, format, source, language, etc.

18
 Metadata information example: XML
• meta information is useful to search more efficiently (cfr.
course 1st bach)

<?xml version="1.0"?>
</Book>
<Title>My Life and Times</Title>
Metadata: tags <Author>Paul McCartney</Author>
<Date>1998</Date>
<ISBN>1-56592-235-2</ISBN>
Data: content
<Publisher>McMillin Publishing</Publisher>
</Book>

19
 Why is metadata information so
important?
• Metadata information
 Making information more comprehensible to humans and
computers!
 E.g. Find documents of the author “Jochen De Weerdt”
= Improve efficiency of search instructions
 Increasing value of information
 Data becomes information!

 People can still use/understand information, also after the

owner of the information leaves the company.
 Improves sharing of information between peoples/companies
 Data stays information!

20
 What is a business information system?

• What is “information”?

• What is a “system”?

• What is a “business information system”?

21
 What is a system?

“A system is 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.”

22
 What is a system?
• Elements
 physical objects, energetic units, biological units…
• Relations
 relations with regard to distance and time, physical relations,
logical relations, cause/effect relations,…
• Purposes
 delivery of services, production of finished goods, obtaining
profits, stimulating employment, …

23
Traffic system
Elements: road infrastructure, vehicles, person as driver or
pedestrian or traffic agent, legislation, lanes, traffic signs,…
Relations: distances between cities, speed allowed in relation
with a specific place, …
Purposes: optimizing traffic flow, maximizing safety, …
24
 What is a system?
• Why do we consider something as a system ?
 to describe and study something
 the description of a system is dependent of the intended
purpose
The skeleton
Muscles
Vascular system
Blood
Digestion
Nutrients
Respiration
The skin
Senses
Nervous system
Hormones

25
A component model of a system

A system “works”,
“processes” something to
Management
achieve a specific goal
component

Input Process Output

component component component

Environment
26
 What is a business information system?

• What is “information”?

• What is a “system”?

• What is a “business information system”?

27
 Business systems
The nature of business systems and the components of a business
system.

Objectives
Intentions
Forecasts

Production
Work
Purchase Products
Materials
Distribution Services
Finance
Sales Information
Data
Info processing

Authority, consumers, customers, suppliers, subcontractors,

employees, trade unions, stakeholders, competitors, …
28
 Business information systems
• “A system is 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.”

• A business information system is a set of related

components to collect, search, process, store and
distribute information in order to support the
coordination and control of the decision making
process within an organization (company,
government, non-profit organization…)
29
 Business information systems
The nature of business information systems and the components of a
business information system.

Management component
Information
management

Input component Process component Output component

Raw Data storage Relevant

data and processing information

Environment = Company (information system as subsystem of business sytem)

30
Information systems vs organization
Information
management

Data storage
Raw Relevant
and
data Information
processing

Environment
Proces-
Input Output
sing

Management
31
3. Types of information
systems

32
Types of business information systems:
a two-dimensional typology

33
 Managerial levels
STRATEGIC
Long term decisions, on group level, often based on
unstructured information, what if analysis

TACTICAL
Mid long term decisions, identify execution plans for
group decisions, project management

OPERATIONAL
Daily operations and decision, based on structured
information, immediate results

34
 Functional domains

• Sales and Marketing • Finance & accountancy

• order processing • registration financial transactions

• pricing • short term budgeting

• forecasts • long term planning

• Production & logistics • Human resources

• process control • registration recruitments and
dismissal
• planning
• distribution of pay scales
• opening a new production unit
• planning personnel needs
• ...

If there is a separation between functional

domains, they are called “isolated silos”. 35
Types of business information systems

36
 Operational information systems
• Characteristics:
 Operational processes are well structured, unambiguous and
routinely.
 Operational decisions regard the short term, occur relatively
often, and contain little uncertainties.
 The required information on this level is: easy to determine,
independent of the individual, well structured, and occurs
particularly within the organization.
• Examples
 Online Transaction Processing Systems (OLTP)
 Enterprise Resource Planning (ERP) systems

37
OLTP: the payroll system example

38
39
40
 Enterprise Resource Planning (ERP) systems
• Single information system for organisation-wide
coordination and integration of
many business processes
• “Off-the-shelf” modules based
on best practices
• “Plain vanilla” ERP
vs. customisation
• Vendors: SAP,
Oracle/PeopleSoft,
Odoo (OpenERP), …

41
 Information systems on tactical level
• Users: middle management and executives
• Decisions
 Concerning mid long term, less often, less routinely, more
uncertainties or risks.
• Required information
 Information from operational level + data warehouses
 Less easy to determine, dependent of individual and moment,
less well structured, need for external information increases.
• Examples
 Management Information Systems (MIS)
 Decision Support Systems (DSS)
42
Management Information Systems
• Components of an MIS
 input: transaction records, data warehouses, simple models
 processing: routine reporting, simple models, low-level
analysis
 output: summary, exception reports
 users: Middle managers

43
Model of an MIS

(Source: Laudon & Laudon, p.47) 44

MIS example reports

45
 Decision Support Systems
• 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

46
 DSS Example
• Voyage-estimating DSS:
• Designed to support assignment of cargoes to freight
ships in order to meet customer delivery schedule at
minimum cost, optimise loading pattern, …

•Given c, how to set x to optimise y?

•What if problem params (e.g. price of fuel) change? 47
48
 Strategic information systems
• Decisions
 concerning long term, rather incidental and irregular character,
much uncertainty and/or risk.
• Required information
 very hard to determine, strongly dependent of individual,
highly less structured and occurs particularly in the company’s
environment.
• Examples
 Executive Support Systems (ESS)
 Data warehousing, OLAP, data mining, web mining, ...

49
 Executive Support Systems
• Components of Executive Support Systems (ESS):
 communication and calculations on strategic level
 input: external and internal aggregated data
 processing: graphical, simulation, interactive
 output: projections, answer to queries
 users: top-level managers, board of directors

50
Model of a typical ESS

(Source: Laudon & Laudon, p.49) 51

52
Mutual relations between systems

53
 Additional types of IS

Knowledge Work
Systems (KWS)

Office Automation
Systems (OAS)

(Source: Laudon & Laudon, Management Information Systems 8, chapter 2) 54

 Additional types of IS
• Office Automation Systems (OAS)
 Office automation
 text processing, voicemail, e-mail, video conferencing,
scheduling systems, …
• Knowledge Work Systems (KWS):
 Specialized systems for scientists, engineers, financial analysts,
… and other knowledge workers to obtain new knowledge (e.g.
creation or improvement of products)
 Computer-aided design (CAD), virtual reality systems, stability
calculations, ...

55