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Chapter 1 Information Systems in Global Business Today 47

FIGURE 1.4 FUNCTIONS OF AN INFORMATION SYSTEM

An information system contains information about an organization and its surrounding environment.
Three basic activities—input, processing, and output—produce the information organizations need.
Feedback is output returned to appropriate people or activities in the organization to evaluate and
refine the input. Environmental actors, such as customers, suppliers, competitors, stockholders, and
regulatory agencies, interact with the organization and its information systems.

guests attending on a particular day or time period, the average wait time per
ride, the average number of restaurant and shop visits, the average number of
rides guests squeezed into a single day’s visit, and the average amount spent
per customer during a specific time period. Such information helps Disney
management gauge the theme park’s overall efficiency and profitability.
Although computer-based information systems use computer technology
to process raw data into meaningful information, there is a sharp distinc-
tion between a computer and a computer program on the one hand, and an
information system on the other. Electronic computers and related software
programs are the technical foundation, the tools and materials, of modern
information systems. Computers provide the equipment for storing and
processing information. Computer programs, or software, are sets of operat-
ing instructions that direct and control computer processing. Knowing how
computers and computer programs work is important in designing solutions
to organizational problems, but computers are only part of an information
system.
A house is an appropriate analogy. Houses are built with hammers, nails, and
wood, but these do not make a house. The architecture, design, setting, land-
scaping, and all of the decisions that lead to the creation of these features are
part of the house and are crucial for solving the problem of putting a roof over
one’s head. Computers and programs are the hammers, nails, and lumber of
computer-based information systems, but alone they cannot produce the infor-
mation a particular organization needs. To understand information systems,

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