|
СНА
PRINCIPLES
LEARNING OBJECTIVES
The value of information is directly linked to how it helps decision makers achieve the
Distinguish data from information and describe the characteristics used to evaluate the quality of data.
constantly making it possible tor organizations to
improve the way they conduct business.
Knowing the potential impact o1 information sys-the ability to put this knowledge ■ in a successful personal career, reach their goals, and в society with a higher quality of life.
Name the components of an information system and describe several system characteristics. Identify four basic types of models and explain how they are used.
Identify the basic types of business information systems and discuss who uses them, how they are used, and what kinds of benefits they deliver.
tern users, business managers, and information systems professionals must wo'k together to build a successful information svste-т.
Identify the major steps of the systems development process and state the goal of each. Discuss why it is important to study and understand information systems.
|
[ Merck-Medco]
A Pharmacy for the Future
In the not-too-distant future, the corner pharmacy and the pleasant pharmacist who fills your prescriptions each month may become a fond memory from bygone days; they will, that is, if Merck-Medco has anything to say about it. Merck-Medco is one of the country's largest pharmacy-benefits managers {PBMs) and a pioneer in a brand-new method for distributing prescription drugs.
The pharmaceutical industry is big business today and will continue growing over the next several years. "Some of the growth stems from new drugs being introduced in the market, but the larger factor is that the population keeps growing older," says Eric Veiel, an analyst with Deutsche Bank. "The older we get, the more drugs we tend to take." Merck-Medco believes that by restructuring the traditional prescription medicine distribution system and automating the process of filling prescriptions, it can satisfy the increasing demand more efficiently.
Merck-Medco contracts with large employers and unions and collects a fee for processing patients' prescriptions and billing the patients' health-plan providers. Merck-Medco customers include United Airlines and its 80,000 U.S. employees, General Motors' 300,000 employees, and Oxford Health Plans' 1.5 million members, to name a few. Prescriptions are placed by physicians via e-mail, phone, or fax to any of Merck-Medco's 13 pharmacies and may be conveniently refilled by the patient at Merck-Medco's Web site or by phone. Once a prescription request is submitted, it starts a chain of events that involves several employees and processes at multiple locations.
A prescription request begins its journey at one of Merck-Medco's processing pharmacies, such as the Liberty Lake plant in Washington state. Here prescriptions are entered into a proprietary electronic system, which first checks the patient's records to see if it is time to refill the medication and then evaluates the prescription from a clinical standpoint. Are there harmful side effects if the drug is combined with other medications the patient is taking? Is there a generic equivalent or a more effective medication? In about one-third of the cases, a Merck-Medco pharmacist will phone the physician to discuss other options for the patient or to ask for clarification. Bob Blyskal, senior vice president of operations, says this initial screening is all-important. "We use technology to dramatically improve quality of care through accuracy, and it allows us to remove pharmacists from counting pills and devote them to real value-added types of activities—drug utilization, generic substitution." Once the prescription is approved and in the system, it is transmitted to a dispensary such as the one at Willingboro, New Jersey.
"Willingboro is the world's largest pharmacy and the most advanced," company president Richard T. Clark said. In its 280,000 square feet, as big as six football fields, it dispenses about 200,000 mail-order prescriptions a week. This number is expected to quadruple by 2003. The dispensing process starts in the command center, a central monitoring system that manages the entire dispensing process and allows employees to track a bottle through various machines. The first step is to print the medication documentation, up to eight pages of patient-specific directions, drug warnings, and billing information. Then the command center gives instructions to the automated pill-counting mechanism and instructs a printer to generate a label and apply it to an empty bottle. The bottle, held in a rack with 23 others, moves to the dispensing lane on a two-mile conveyor belt. Once the bottle gets to the proper dispensing channel, the command center releases the pills. A bar code reader ensures that the right bottle is under the right dispensing channel. Once filled, the bottle, along with the documentation, is put in a bag. heat-sealed, and bar-code labeled. Scanners do a final accuracy check, and the package goes to the mail-sorting area. The whole trip down the conveyor belt takes about 15 minutes.
Merck-Medco provides its customers with a Web site that gives useful information concerning their prescriptions and other health-care issues. The site, located at www.merck-medco.com. provides easy and secure methods for members to fill prescriptions, review
information systems are everywhere. An advanced information system can be used to obtain prescriptions from automated kiosks: Customers respond to questions on a touch screen, pay with a credit card, and the dispenser delivers the medication. (Source. AP/Wide World Photos.) |
information system (IS)
a set of interrelated components that collect, manipulate, and disseminate data and information and provide a feedback mechanism to meet an objective
prescription prices and copayments based on their health plans, check prescription records and benefits, receive e-mail reminders for refills, order nonprescription general health items through its relationship with on-line orugstore CVS.com, and research a wide variety of "eahh-ca'e information.
T|~rough seamless interaction among its Web site, phar-■^acs: screening, and automated dispensing systems, Мегск-Мессо is often able to mail prescription refills on the sane day tney are requested. Are we wise to trust machines to fiJ our prescriptions? Merck-Medco claims that its system has never put a wrong pill in a wrong bottle,
As you read this chapter, consider the following:
© In what ways has Merck-Medco's new process for filling prescriptions improved the business of the organizations (such as United Airlines) that make use of its services, the lives of employees/members of those organizations, the practice of physicians, and the work of pharmacists and other employees of Merck-Medco? Are there any drawbacks to this new system? © Besides pharmacies, what other traditional businesses might profit from this type of automation?
An information system (IS) is a set of interrelated components that collect, manipulate, and disseminate data and information and provide a feedback mechanism to meet an objective. We all interact daily with information systems, both personally and professionally. We use automatic teller machines at banks, checkout clerks scan our purchases using bar codes and scanners, we access information over the Internet, and we get information from kiosks with touchscreens. Major Fortune 500 companies are spending in excess of $1 billion per year on information technology. In the future, we will depend on information systems even more. General Motors, for example, has teamed up with Fidelity Investments to allow people to get information or. investments and trade stocks using voice commands from a car or truck.1 Knowing the potential of information systems and having the ability to put this knowledge to work can result in a successful personal career, organizations that reach their goals, and a society with a higher quality of life.
Computers and information systems are constantly changing the way organizations conduct business. We saw in the opening vignette, for example, how Merck-Medco was able to speed the delivery of prescriptions while maintaining a high degree of accuracy. Today we live in an information economy. Information itself has value, and commerce often involves the exchange of information rather than tangible goods. Systems based on computers are increasingly being used to create, store, and transfer information. Investors are using information systems to make multimillion-dollar decisions, financial institutions are employing them to transfer billions of dollars around the world electronically, and manufacturers are using them to order supplies and distribute goods faster than ever before. Computers and information systems will continue to change our society, our businesses, and our lives. In this chapter, we present a framework for understanding computers and information systems and discuss why it is important to study information systems. This understanding will help you unlock the potential of properly applied information systems concepts.
NFOKMATION CONCEPTS__________________________________________________
Information is a central concept throughout this book. The term is used in the title of the book, in this section, and in almost every chapter. To be an effective manager in any area of business, you need to understand that information is one of an organization's most valuable and important resources. This term, however, is often confused with the term data.
data
=.'. facts, such as an employee's " s^e and number of hours worked з week, inventory part numbers, " - sales orders
information
collection of facts organized in ".:1a way that they have addi-":~al value beyond the value of facts themselves
T- of logically related tasks ■: "ned to achieve a defined
::~ie
DATA VERSUS INFORMATION
Data consists of raw facts, such as an employee's name and number of hours worked in a week, inventory part numbers, or sales orders. As shown in Table 1.1, several types of data can be used to represent these facts. When these facts are organized or arranged in a meaningful manner, they become information. Information is a collection of facts organized in such a way that they have additional value beyond the value of the facts themselves. For example, a particular manager might find the knowledge of total monthly sales to be more suited to his or her purpose (i.e., more valuable) than the number of sales for individual sales representatives. Providing information to customers can also help companies increase revenues and profits. Uniglobe.com, Inc. provides fast and accurate information to people considering a cruise.2 According to Mike Dauberman, senior vice president of business operations, "If you can grab a customer while they're on their peak of interest in a cruise, they're considerably more likely to buy it."
Data represents real-world things. As we have stated, data—simply raw facts—has little value beyond its existence. For example, consider data as pieces of railroad track in a model railroad kit. In this state, each piece of track has little value beyond its inherent value as a single object. However, if some relationship is defined among the pieces of the track, they will gain value. By arranging the pieces of track in a certain way, a railroad layout begins to emerge (Figure 1.1, top). Information is much the same. Rules and relationships can be set up to organize data into useful, valuable information.
The type of information created depends on the relationships defined among existing data. For example, the pieces of track could be rearranged to form different layouts (Figure 1.1, middle). Adding new or different data means relationships can be redefined and new information can be created. For instance, adding new pieces to the track can greatly increase the value—in this case, variety and fun—of the final product. We can now create a more elaborate railroad layout (Figure 1.1, bottom). Likewise, our manager could add specific product data to his sales data to create monthly sales information broken down by product line. This information could be used by the manager to determine which product lines are the most popular and profitable.
Turning data into information is a process, or a set of logically related tasks performed to achieve a defined outcome. The process of defining relationships
:~s of Data
Data
Alphanumeric data Image data Audio data
Represented By
Numbers, letters, and other characters Graphic images and pictures Sound, noise, or tones
Video data
Moving images or pictures
|
|
knowledge
an awareness and understanding of a set of information and ways that information can be made useful to support a specific task or reach a decision
among data to create useful information requires knowledge. Knowledge is an awareness and understanding of a set of information and ways that information can be made useful to support a specific task or reach a decision. Part of the knowledge needed for building a railroad layout, for instance, is understanding how large an area is available for the layout, how many trains will run on the track, and how fast they will travel. The act of selecting or rejecting facts based on their relevancy to particular tasks is also based on a type of knowledge used in the process of converting data into information. Therefore, information can be considered data made more useful through the application of knowledge. Trimac, a Canadian bulk hauling company, for example, computerized its data to produce useful information to help it analyze profit potential.3 According to a Trimac manager, "This technology facilitates the implementation of data... used for trip analysis, haul analysis, and profitability, either by customer or equipment."
In some cases, data is organized or processed mentally or manually. In other cases, a computer is used. In the earlier example, the manager could have manually calculated the sum of the sales of each representative, or a computer could calculate this sum. What is important is not so much where the data comes from or how it is processed but whether the results are useful and valuable. This transformation process is shown in Figure 1.2.
THE CHARACTEK1STICS OF VALUABLE INFORMATION
To be valuable to managers and decision makers, information should have the characteristics described in Table 1.2. These characteristics also make the information more valuable to an organization. United Parcel Service (UPS) is able to determine the exact location of every package in its system.4 This increased accuracy saves the company both time and money. According to one UPS executive,
7"fte Process of Transforming Data into Information
Data |
| The transformation process (applying knowledge by selecting, organizing, and manipulating data) |
|
|
|
"That saves us from having to unload 20 trucks to find one little package, the way we had to do it five years ago." In addition, if an organization's information is not accurate or complete, people can make poor decisions, costing organizations and individuals thousands, or even millions, of dollars. Many believe, for example, that the collapse of energy-trading firm Enron in 2001 was a result of inaccurate accounting and reporting information, which led investors and employees alike to misjudge the actual state of the company's finances and suffer huge personal losses. As another example, if an inaccurate forecast of future demand indicates that sales will be very high when the opposite is true, an organization can invest millions of dollars in a new plant that is not needed. Furthermore, if information is not pertinent to the situation, not delivered to decision makers in a timely fashion, or too complex to understand, it may be of little value to the organization.
Useful information can vary widely in the value of each of these quality attributes. For example, with market-intelligence data, some inaccuracy and incompleteness is acceptable, but timeliness is essential. Market intelligence may alert us that our competitors are about to make a major price cut. The exact details and timing of the price cut may not be as important as being warned far enough in advance to plan how to react. On the other hand, accuracy, verifiability, and
------------------- (*}------------------- completeness are critical for data used in accounting for company assets such as
Characteristics of Valuable Data cash, inventory, and equipment.
Characteristics
Accurate
Complete
Economical
Flexible
Reliable
Relevant
Simple
Timely
Verifiable
Accessible
Definitions
Accurate information is error free. In some cases, inaccurate information is generated because inaccurate data is fed into the transformation process (this is commonly called garbage in, garbage out [GIGO]).
Complete information contains all the important facts. For example, an investment report that does not include all important costs is not complete.
Information should also be relatively economical to produce. Decision makers must always balance the value of information with the cost of producing it.
Flexible information can be used for a variety of purposes. For example, information on how much inventory is on hand for a particular part can be used by a sales representative in closing a sale, by a production manager to determine whether more inventory is needed, and by a financial executive to determine the total value the company has invested in inventory.
Reliable information can be depended on. In many cases, the reliability of the information depends on the reliability of the data collection method. In other instances, reliability depends on the source of the information. A rumor from an unknown source that oil prices might go up may not be reliable.
Relevant information is important to the decision maker. Information that lumber prices might drop may not be relevant to a computer chip manufacturer.
Information should also be simple, not overly complex. Sophisticated and detailed information may not be needed. In fact, too much information can cause information overload, whereby a decision maker has too much information and is unable to determine what is really important.
Timely information is delivered when it is needed. Knowing last week's weather conditions will not help when trying to decide what coat to wear today.
Information should be verifiable. This means that you can check it to make sure it is correct, perhaps by checking many sources for the same information.
Information should be easily accessible by authorized users to be obtained in the right format and at the right time to meet their needs.
Secure
Information should be secure from access by unauthorized users.
THE VALUE OF INFORMATION
The value of information is directly linked to how it helps decision makers
achieve their organization's goals. For example, the value of information might be
measured in the time required to make a decision or in increased profits to the
company. Consider a market forecast that predicts a high demand for a new
product. If market forecast information is used to develop the new product and
the company is able to make an additional profit of $10,000, the value of this
information to the company is $ 10,000 minus the cost of the information.
National Semiconductor Corporation uses information to achieve its goal of
speedy delivery of chips to customers.5 A box of computer chips manufactured in
Singapore car. be shipped to computer manufacturers in the United States in less
than 12 hours. Valuable information can also help managers decide whether to
invest:n additional information systems and technology. A new computerized
ordering system may cost 530,000, but it may generate an additional $50,000 in
sales. The addid by the new system is the additional revenue from the
increased sales of S20.000. Most corporations have cost reduction as a primary goal. BASF, a large chemical company headquartered in Germany, spends nearly SI00 million in distributing its inventory to North American customers.6 Using a computerized inventory information system, BASF was able to reduce annual inventory distribution costs by 6 percent, or $6 million. Using the computerized information system also allowed BASF to identify a one-time cost savings of nearly S10 million.
SYSTEM AND MODELING CONCEPTS
system
a set of elements or components that interact to accomplish goals
Like information, another central concept of this book is that of a system. A system is a set of elements or components that interact to accomplish goals. The elements themselves and the relationships among them determine how the system works. Systems have inputs, processing mechanisms, outputs, and feedback. For example, consider an automatic car wash. Obviously, tangible inputs for the process are a dirty car, water, and the various cleaning ingredients used. Time, energy, skill, and knowledge are also needed as inputs to the system. Time and energy are needed to operate the system. Skill is the ability to successfully operate the liquid sprayer, foaming brush, and air dryer devices. Knowledge is used to define the steps in the car wash operation and the order in which those steps are executed (See Figure 1.3).
The processing mechanisms consist of first selecting which of the cleaning options you want (wash only, wash with wax, wash with wax and hand dry, etc.) and communicating that to the operator of the car wash. Note that there is a
Components of a System A system's four components consist of input, processing, output and feedback. |
Input -------------------------------------------- —*• Processing ------------------------------------------------- *- Output ♦ * A Feedback |
Brewing equipment |
|
Coffee beans, lea bags, water, sugar, cream, spices, pastries, other ingredients, labor, management |
Students, professors, administrators, textbooks, equipment |
Actors, director, staff, sets, equipment |
Processing mechanisms
Teaching, research, service
Filming, editing, special effects, film distribution
Outputs
Coffee, tea, pastries, other beverages and food items
Educated students; meaningful research; service to community, state, and nation
Finished film delivered to movie theaters
Goal
Quickly prepared delicious coffees, teas, and various food items
Acquisition of knowledge
Entertaining movie, fiim awards, profits
-------------- ®~-------------- "'es of Systems and Their and Elements -~ @ Steve SmitlVTaxi; courtesy?J3I Systems Division; image:-- Ъ 1998 Photodisc.) |
feedback mechanism (your assessment of how clean the car is). Liquid sprayers shoot clear water, liquid soap, or car wax depending on where your car is in the process and which options you selected. The output is a clean car. It is important to note that independent elements or components of a system (the liquid sprayer, foaming brush, and air dryer) interact to create a clean car. Figure 1.4 shows a few systems with their elements and goals.
SYSTEM COMPONENTS AND CONCEPTS
Figure 1.3 shows a typical system diagram—a simple automatic car wash. The
m boundary primary purpose of the car wash is to clean your automobile. The system
■= of the system; it defines boundary defines the system and distinguishes it from everything else (the
=:sm and distinguishes it from environment).
'" "Э else (the environment),,,. „,. r.
Ine way system elements are organized or arranged is called the configuration.
Much like data, the relationships among elements in a system are defined through
knowledge. In most cases, knowing the purpose or desired outcome of a system is
the first step in defining the way system elements are configured. For example, the
efficiency a measure of what is produced divided by what is consumed |
Systems Classifications and Their Primary Characteristics |
System Types
Systems can be classified along numerous dimensions. They can be simple or complex, open or closed, stable or dynamic, adaptive or nonadaptive, permanent or temporary. Table 1.3 defines these characteristics.
Classifying Organizations by System Type
Most companies can be described using the classification scheme in Table 1.3. For example, a janitorial company that cleans offices after business hours most likely represents a simple, stable system because there is a constant and fairly steady need for its services. A successful computer manufacturing company, however, is typically complex and dynamic because it operates in a changing environment. If a company is nonadaptive, it may not survive very long. Many of the early computer companies, including Osborne Computer, which manufactured one of the first portable computers, and VisiCorp, which developed the first spreadsheet program, did not adapt rapidly enough to the changing market for computers and software. As a result, these companies did not survive. On the other hand, IBM was able to reinvent itself from a manufacturer of large, mainframe computers to a manufacturer of all classes of computers and a software and services provider.
SYSTEM PERFORMANCE AMD STANDARDS
Дата добавления: 2015-09-30; просмотров: 40 | Нарушение авторских прав
| <== предыдущая лекция | | | следующая лекция ==> |
