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Chapter 1 Information Systems in Global Business Today 45

industry leaders because they know how to use information systems for this
purpose.

Survival
Business firms also invest in information systems and technologies because
they are necessities of doing business. Sometimes these “necessities” are driven
by industry-level changes. For instance, after Citibank introduced the first
automated teller machines (ATMs) in the New York region in 1977 to attract
customers through higher service levels, its competitors rushed to provide ATMs
to their customers to keep up with Citibank. Today, virtually all banks in the
United States have regional ATMs and link to national and international ATM
networks, such as CIRRUS. Providing ATM services to retail banking customers
is simply a requirement of being in and surviving in the retail banking business.
There are many federal and state statutes and regulations that create a legal
duty for companies and their employees to retain records, including digital
records. For instance, the Toxic Substances Control Act (1976), which regulates
the exposure of U.S. workers to more than 75,000 toxic chemicals, requires
firms to retain records on employee exposure for 30 years. The Sarbanes-Oxley
Act (2002), which was intended to improve the accountability of public firms
and their auditors, requires certified public accounting firms that audit public
companies to retain audit working papers and records, including all e-mails,
for five years. Many other pieces of federal and state legislation in health
care, financial services, education, and privacy protection impose significant
information retention and reporting requirements on U.S. businesses. Firms
turn to information systems and technologies to provide the capability to
respond to these challenges.

1.2 PERSPECTIVES ON INFORMATION SYSTEMS

So far we’ve used information systems and technologies informally without
defining the terms. Information technology (IT) consists of all the hard-
ware and software that a firm needs to use in order to achieve its business
objectives. This includes not only computer machines, storage devices, and
handheld mobile devices, but also software, such as the Windows or Linux
operating systems, the Microsoft Office desktop productivity suite, and the
many thousands of computer programs that can be found in a typical large
firm. “Information systems” are more complex and can be best be understood
by looking at them from both a technology and a business perspective.

WHAT IS AN INFORMATION SYSTEM?

An information system can be defined technically as a set of interrelated
components that collect (or retrieve), process, store, and distribute information
to support decision making and control in an organization. In addition to sup-
porting decision making, coordination, and control, information systems may
also help managers and workers analyze problems, visualize complex subjects,
and create new products.
Information systems contain information about significant people, places,
and things within the organization or in the environment surrounding it.
By information we mean data that have been shaped into a form that is
meaningful and useful to human beings. Data, in contrast, are streams of raw

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