Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
1
Chapter 1
Information Systems and People
Learning Objectives
1. Describe the main roles that information systems play in organizations.
2. Compare the terms data, information, and knowledge, and describe three
characteristics that make information valuable.
3. Describe the four main components of an information system and the role that
each plays.
4. Identify several research areas that are studied in the discipline of management
information systems (MIS).
5. Provide examples of how business, nonprofit, and government managers, as well
as information technology departments, depend on information systems
knowledge.
6. Explain how information systems present both promises and perils, and pose
ethical questions.
Solutions to Chapter Review Questions
1-1. What are the six primary roles of information systems in organizations? How
are information systems used in each context?
Information systems play critical roles in (1) managing operations, (2) supporting
customer interactions, (3) making decisions, (4) collaborating on teams,
(5) gaining competitive advantage, and (6) improving individual productivity.
In operations management, information systems are used to manage assets and
inventories; track employee payroll, taxes, benefits, and timesheets; process
transactions; track accounts payable and accounts receivable; procure goods and
services; and pay suppliers. Information systems that support customer
interactions include customer relationship management systems, web-based front
offices, online self-service applications, modern point-of-sale systems and self-
service checkouts. Information systems support data-driven decision making by
using both internal organizational data and external data from partners, suppliers
and public sources. Smart managers use aggregated data to identify trends and
patterns rather than rely on gut instincts.

Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
2
Collaboration and teamwork have considerable support from information systems
such as web applications that enable virtual meeting spaces and social networking
sites. Microsoft’s SharePoint is an example of information technology that
supports project teams with document management, shared calendars, and
communication features. The innovative use of an information system can provide
a competitive advantage until competitors jump on the bandwagon. Consider how
Apple’s iPhone got the jump on smartphone competitors with Siri, the intelligent
personal assistant. The selection of information systems and technology to
improve personal productivity ranges from use of email and smartphones to word
processing programs and contact databases. The challenge for most people is to
pick easy-to-use software and devices that integrate with existing applications.
1-2. How is data different from information? How is information different from
knowledge? What are examples of each?
Data refers to individual facts or pieces of information, and information refers to
data or facts that are assembled and analyzed to add meaning and usefulness. A
patient’s temperature reading is one piece of data; however, when combined with
other pieces of data in a patient records information system, it becomes
information that is useful for diagnostic purposes. Aggregated with data from
other patients, it can be further refined and analyzed to become knowledge of a
flu outbreak that is even more useful.
1-3. What are the three characteristics that make information valuable? Why is
each a critical attribute of information?
The three characteristics that make information valuable are timeliness, accuracy,
and completeness. Timeliness is a critical attribute for certain kinds of
information, such as stock prices. Accuracy is a critical attribute for some
information, such as a patient’s temperature reading. On the other hand, extreme
accuracy may not be necessary for certain kinds of information, such as a
competitor’s price for a rival product. Completeness is a critical attribute for some
information, such as a patient’s list of current medications. In the context of a
marketing survey, complete information adds value as a means to avoid bias or
spin.
1-4. What are the four components of an information system? Describe each
component. What are the five functions that these components provide?
The four components of an information system are (1) people, (2) technology, (3)
processes, and (4) data. People interact with information systems in various roles
such as systems analysis and developers, managers, users, customers, and
contributors. Information technology includes hardware, software, and
telecommunications equipment. Business processes are activities designed to
achieve a task, such as automatically generating form letters to students. Data are

Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
3
facts represented by values, which have meaning in a certain context. Data may
be numbers, character strings, or symbols. These four components are used to
collect, process, manage, analyze, and distribute information.
1-5. How are information systems important to managers in a variety of
functional business units? What are examples of ways that information
systems are important to the success of a marketing department, a human
resources department, and a small business owner?
Information systems are important to business managers because they support the
company’s business activities throughout every functional department.
Information systems are used to streamline processes, reduce costs, increase
revenue, or support a strategic initiative. A marketing department uses
information systems to develop data-driven marketing strategies, analyze ROI for
marketing campaigns, and leverage social networking trends to create interest in
the company’s products. A human resources department uses information systems
to deliver online learning programs to reach more employees. A small business
owner can take advantage of the decline in cost for many information systems,
such as inexpensive intelligent dialing software that enables call center staff to
more efficiently reach mobile phone customers.
1-6. What are the functional areas that are common to most information
technology departments?
Common functional areas in an information systems department include end-user
support and help desk, systems administration, data center operations, enterprise
systems, and telecommunications and network services.
1-7. What is the role of the chief information officer?
The chief information officer (CIO) oversees the IT department, and helps to
shape the organization’s strategic goals and ensure that the information systems
support them. The CIO might report directly to the CEO or the vice president of
finance and administration.
1-8. How do information systems offer promises to organizations? What are some
of the perils of information systems? What are some of the ethical questions
associated with the use of information systems?
Students should be able to discuss how information systems offer promises to
organizations by giving them the opportunity or the possibility to change the way
they operate. The perils of information systems include the increased risk of
privacy breaches and amplification effects that result from interconnected
systems. A number of ethical questions are associated with the use of information
systems: Who is responsible for the damage caused by a privacy breach? Who is

Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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responsible when false, damaging, or illegal videos are shared on the Internet? Is
it unethical to broadcast an email message received by mistake?
Solutions to Projects and Discussion Questions
1-9. As customers, students, patients, taxpayers, and citizens, we are surrounded
by information systems that support customer interactions. Identify and
describe two such systems that you have used. Briefly, describe the types of
customer interactions you have experienced with these systems and compare
what you found to be important features of each one. Are there features or
function that you would change or add to either system?
Answers will vary, as the object of this question is to prompt the student to
consider features of an information system. An example is a student registration
system that allows students to browse class offerings, review course descriptions
and required textbooks, and register for classes.
1-10. Web conferencing has been available for many years. In this market space,
products from Adobe, Cisco, Citrix, IBM, and Microsoft compete with lower-
cost or free web-conferencing applications from AnyMeeting, Yugma, and
others. What are some of the advantages of using a virtual meeting space?
Are there disadvantages? Search the web to learn more about online meeting
rooms and prepare a 5-minute presentation of your findings.
The benefits of virtual meetings include saved time and money, increased
productivity, increased meeting participation, and the ability to record meetings
for presentation at a later date. On the other hand, virtual meeting participants
may be less likely to build strong, personal relationships, and they may be more
likely to experience distractions and engage in multi-tasking (i.e., checking email)
during the meeting. Acquiring the necessary technology and training in the use of
that technology are additional drawbacks of virtual meetings.
1-11. Information systems play a very large role in decision making, and many
would argue that you can always use more information to make better
decisions. But sometimes digging deeply for more information leads to
troubling ethical dilemmas. Visit 23andme.com, the website of a company
that offers to read your DNA from saliva for $99 and provide reports about
disease risk factors, ancestral lineage, and more. If you learn of a significant
health risk, should you tell siblings who chose not to investigate their own
DNA? Should you tell your fiancée? List what factors should be taken into
account when making decisions about whether to obtain information like
this, and how to use it.

Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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Answers to this question will vary based on the student’s perspective and
experience. Potential factors that students may identify are the physical and
psychological health of their friends and family, their own physical and
psychological health, and potential impact to past and future relationships.
1-12. One way to be more productive and manage time efficiently, is to use the
calendar feature of your email system. If you use Microsoft Outlook, visit
Microsoft.com and search for “Outlook tutorial” or search the Internet for
an Outlook “how to” web page to learn how to set up your calendar. Then
create a calendar for the semester that shows class times as well as test dates
and project due dates. Which reminder option did you select for class times?
Which reminder option did you select for project due dates? Briefly, describe
several benefits of using the Outlook calendar feature.
Answers will vary, as the object of this question is to require students to work
with software that enhances productivity. At a minimum, students should be able
to list several benefits of the Outlook calendar feature that include the ability to
mark items such as appointments, meetings, or all-day events, and specify items
as recurring or one-time events. The scheduling option is used to invite others to a
meeting. Reminders can be set anywhere from 15 minutes up to 5 days prior to
an appointment.
1-13. Although Internet users bemoan its annoying popup ads, Netflix has grown
to more than 80 million customers who can stream movies and TV episodes to
any Internet-connected device or request DVDs by mail. Describe Netflix in
terms of (1) the types of information technology it uses and (2) its customer-
facing business processes.
Answers supplied by students will vary, but generally should be drawn from
chapter information contained in Section 4: The Components of an Information
System. Answers should include brief statements relating to people, technology,
processes, and data.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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1-14. Consider the information that is maintained by a bank. In addition to
customer records, the bank maintains records on accounts and loans. Figure
1-20 and Figure 1-21 (below) are two examples of database tables for a
regional bank. How might this data be aggregated and analyzed to create
information and knowledge?
Figure 1-20
Customers table
CustomerID Name Address City State Zip
100001 Don Baker 1215 E. New York Aurora IL 60504
100002 Yuxiang Jiang 1230 Douglas Road Oswego IL 60543
100003 Emily Brown 632 Fox Valley Road Aurora IL 60504

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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1-16. A typical information technology department is comprised of common
functional areas, and each requires skills and competencies unique to that
area. Search the web or visit an online job search site such as
careerbuilder.com or monster.com to learn more about the IT functional
areas described in Figure 1-15. Select two functional areas and compare job
postings for each. In a brief report, contrast the differences in education,
experience, and technical certification that are required for each job.
Answers will vary depending on the websites accessed. Job titles generally should
be drawn from information contained in Figure 1-16. Students may identify
network and security certifications such as CCNA (Cisco Certified Network
Associate), CCNP (Cisco Certified Network Professional), and CompTIA’s A+,
Network+, and Security+ certifications.
1-17. In June, 2010, a security breach in the AT&T network exposed the email
addresses of 114,000 Apple iPad 3G owners, many of whom are well-known
business executives. The list of subscribers that were impacted by the breach
included Diane Sawyer of ABC News, New York City Mayor Michael
Bloomberg, and former White House Chief of Staff and Chicago Mayor Rahm
Emanuel. Work in a small group with classmates to consider the severity of this
leak of private information. In this case, is the severity of the breach measured
by the number of affected individuals or by the high-profile status of some of the
subscribers? What criteria are best for judging the severity of a data leak?
Prepare a brief summary of your group discussion.
Answers will vary but students should weigh the factors that they consider
important in judging the scope of the damage, and defend their criteria. The
extent of harm done directly and indirectly should be considered, whether or not
high profile individuals are involved.
1-18. Information systems are fundamental to the success of every functional
business unit within an organization, from marketing to manufacturing to
finance. Work in a small group with classmates to share your career choice
and discuss how information systems support processes within your field.
Can you name types of software applications that are used in your chosen
career?
Answers will vary depending on students’ career choices. Students should discuss
how information systems support processes within a given field in the context of
the different roles information systems play in different organizations. Accounting
majors may identify QuickBooks or Peachtree accounting programs. Marketing
majors may identify email marketing or Internet marketing software programs.
Information technology majors may identify project management software
programs.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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Solutions to Application Exercises
1-19. Excel Application: Manpower Planning Spreadsheet
Precision Products specializes in custom-manufactured metal parts. The production
manager has asked you to create an Excel spreadsheet to help manage operations.
The company needs a way to calculate staffing requirements (number of employees)
based on different levels of production. The five manufacturing operations are
fabrication, welding, machining, assembly, and packaging. One unit of production
requires 1.5 hours for fabrication, 2.25 hours for welding, 0.7 hours for machining,
3.2 hours for assembly, and 0.5 hours for packaging. Create the Excel spreadsheet
shown in Figure 1-18 to calculate the weekly manpower required, at 40 hours per
week, for production levels of 200, 300, 400, and 500 units. How does the total
required for each level of production change if Precision Products operates a 45-
hour production schedule?
In the file Excel Ch01Ex01, students should go to the cell containing 40 (Weekly
Manpower) hours and change it to 45; the formula would then recalculate the Total
Manpower amount.
Figure 1-18
Managing operations at Precision Products using Excel.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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1-20. Access Application: Information Systems in Business
Seconds Later, a clothing consignment shop, is fast becoming a favorite place to
shop. The owner has asked you to create an Access database to help manage
inventory. Download and import the information provided in the spreadsheet
Ch01Ex02 to create a database with two tables (Consignors and Items). The owner
wants you to add a calculated field to the items table that shows the net selling price
after he has paid the commission to the consignors. Start with two reports: an
Inventory Report and a Consignor Report. The Inventory Report summarizes the
inventory by item type. This report will include the number of items and the total
selling price for each item type, plus the total sales value of each inventory type. It
will also include the total potential commission to be earned if all items are sold. The
Consignor Report will list the total number of items and the total selling price and
commission to be paid for each consignor. What other reports could you make with
this data that would be useful to the owner?
Students should produce an Access database with two tables by importing data from the
Excel file named Ch01Ex02. In Access 2010, you can create table fields that calculate
values. In Access 2007, calculated fields are created in a query. Students should create
queries to produce the Inventory Report and the Consignor Report, using the Property
sheet caption field to name the columns and the format function to show values as
currency.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
11
Solutions to Case Study Questions
Case 1—Nasdaq’s Information Challenges: Facebook’s Botched Public Opening
and High-Frequency Trading
1-21. How has Nasdaq’s business benefited from the use of information systems?
The purpose of the first two questions for this case is to have students consider
how information systems (IS) can transform an organization. Nasdaq is a
technology company that would not be possible without IS. IS enabled Nasdaq to
enter the trading market even after the NYSE was well established, to offer
customers a full range of trading services even as a relatively new organization,
and to achieve an advantage in speed compared with other exchanges. Further, IS
are a source of revenue growth for Nasdaq, as Nasdaq has sold its technology to
other countries and the IT department directly supports Nasdaq’s new business
strategies.
1-22. What risks do information systems pose for Nasdaq OMX’s business?
The purpose of this question is to have students give a balanced consideration to
the risks of IS as well as the benefits of IS. The benefits of IS were addressed in
question 1 above, and this question addresses risks. One risk is that IS lowers the
cost of doing business for all firms in an industry, which is likely to lead to lower
prices. Nasdaq must manage this risk by finding ways to remain profitable even in
an environment of lower prices. A second risk is that IS can contribute to high
market volatility, which could lead to a loss of investor confidence and cause
instability for the entire industry. To manage this risk, Nasdaq would want to be
involved in the creation of industry-wide technical and trading standards to
achieve greater stability.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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1-24. What does the example of Goldman Sachs paying to locate its server in the
Nasdaq data center say about the relationship between information systems and
physical operations?
The purpose of this question is to help students understand the relationship
between technical considerations and physical operations. This theme will surface
in several cases throughout the textbook. Given the importance of timeliness to
Nasdaq customers (see question 3 above), even with high-speed IS there is a small
benefit in response time based on server location and the distance the information
must travel to confirm trades. Trades are conducted within nanoseconds so any
delays due to physical distance might be costly. Goldman Sachs is willing to pay
a premium for server location, which represents yet another IS revenue source for
Nasdaq. Even in automated operations, students will need to understand where
physical location may still make a difference for firms, workers, and customers.
Case 2—Breaking News: Twitter’s Growing Role in Emergencies and Disaster
Communications.
1-25. What are the potential benefits of Twitter and other social media for
emergency and disaster communications?
The purpose of the first two questions for this case is to have students consider
how IS can transform a

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
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individual citizens are preparing updates, the updates may vary in depth and
accuracy. Management of this risk will be discussed in the next question.
1-27. What types of education would be necessary at the user level to make Twitter
and other social media more effective for emergency and disaster communications?
The purpose of this question is to have students consider the value chain in social
media. As social media begins to play a role in functions (such as public safety)
that were previously handled by firms, students need to understand how the
related value chains may be impacted. The key objectives of educating citizens on
the use of social media in emergencies would be to reduce variability and increase
quality and timeliness of communications. Accordingly, it would be useful to
educate citizens on basic principles (such as syntax) of using social media for
emergency communications. It is also important to remind citizens to issue
genuine communications, and to prioritize urgent communications during an
emergency or disaster.
1-28. What would need to happen on the part of aid organizations and traditional
media for Twitter and other social media to be effective in emergency and disaster
communications?
The purpose of this question is for students to continue the discussion from
question 3 and consider the value chain implications of using social media for
emergency and disaster communications. Although citizens may originate the
communications, aid organizations and traditional media would still need to
monitor the communications, integrate the communications, and prioritize the
communications so that appropriate action can be taken. Aid organizations also
need to coordinate directly with each other to ensure that they do not duplicate
efforts in the response, and that they allocate resources efficiently to address all
important areas in a timely manner.

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
14
On May 6, 28,560,400 shares of Apple stock were traded.
1-30. Create a line graph from the AAPL data, in which the dates are on the x-axis
(horizontal), and the stock prices are on the vertical y-axis. Include the opening
price, high, low, and closing price on the graph. Add a title to the top of your chart.
The line graph would appear as follows:
1-31. Download Expedia stock prices (ticker symbol EXPE) for the same time
period (May 3–May 14, 2010) from http://finance.yahoo.com. (Click on Historical
Prices, under QUOTES.)
a) Create a line graph to compare the Low and Closing prices for Apple
stock and Expedia stock. You do not need to include Open and High
prices on this graph.
The line graph would appear as follows:35
40
45
50
55

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Wallace, Introduction to Information Systems, 3rd edition
Instructor’s Manual
Chapter 1, Information Systems and People
15
b) How do you compare the activity on those two stocks?
Apple experienced a significant intraday price decline (Low stock price)
on May 6 during the “flash crash,” while Expedia did not experience a
significant decline that day.
E-Project 2—Gathering, Visualizing, and Evaluating Reports from Twitter and
Other Sources During a Disaster
Download the Excel file called “Ch01_OilSpill,” which contains sample reports, and
answer the following questions:
1-32. First, select columns B through F and reformat them with the word “wrap,” so
you can easily see the actual comments people sent in.
Using word “wrap,” the spreadsheet should now appear consistent with the
sample of title and first two lines of data below:
1-33. Suppose you have a friend who lives in Bay Champagne. First sort the table by

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