End of Chapter Summary

A system is a set of interrelated parts that work together for a common purpose. A system’s functions can be divided into input, processing, output, feedback, and control. A system can be a subsystem of another system and may interact with other systems in its environment. Both computers and business organizations can be viewed as systems.

The value chain model views the business organization as a set of activities that add value to the firm’s products or services. The model distinguishes between primary, productionoriented activities and secondary, support-oriented activities. Each activity is a subsystem with its own inputs and outputs; together, these subsystems interact with each other to determine the overall performance of the organization. As a subsystem of a larger business organization, an information system is a set of interrelated parts that work together to produce, distribute, and use information products. Some information systems support the feedback and control function of the organization, enabling better management decisions to be made. Other information systems, called transaction processing systems, keep track of transaction-based business processes, such as purchasing and invoicing. Transaction processing involves repeating a series of five steps: entering data, processing data, storing and updating data, preparing documents and reports, and handling user inquiries. Enterprise resource planning systems pull together information from multiple transaction processing systems, enabling businesses to make interactions among their departments and with outside organizations even more efficient.

In a systems view of a business organization, management represents the control function. Low-level, operational managers make the most structured decisions. Their work is supported by management information systems. Decision support systems provide information to middle-level, tactical managers who make semistructured decisions. Highlevel, strategic managers make unstructured decisions. A system providing information to top managers is called an executive information system. Group decision support systems enhance collaborative decision making by teams of managers.

An organization typically creates an overall IT plan before developing particular systems. The IT plan describes intended overall use of information technology to meet the company’s needs. The organization then follows the plan, using cost-benefit analysis to select specific projects to develop and project planning techniques to track system development schedules.

Information systems are tools that should be designed to meet the information needs of the people using them. Poorly designed information systems can result in information overload and hamper a manager’s ability to communicate effectively or make quality decisions. A company’s information code of ethics should address the privacy, intellectual ownership, and the information quality and access policies to guide its managers and information workers and foster an ethical information culture.