Unit 1.2
Why Study Information Systems?
IT 233: Business Information Systems
Chapter Learning Objectives
By the end of this chapter, you will be able to:
- ✅ Explain why IS is crucial for all business professionals.
- ✅ Identify how IS supports different functional areas of a business.
- ✅ Describe the role of IS in data-driven decision-making and innovation.
- ✅ Recognize the value of IS knowledge for personal career growth.
The Core Question
In today's digital economy, understanding Information Systems is no longer just for the IT department.
It is a vital skill for every business manager, entrepreneur, and employee.
Key Idea: IS literacy is a prerequisite for success in modern business.
1. IS is Integral to All Business Functions
Information Systems are the operational backbone of every contemporary business department.
Marketing 🎯
Uses CRM systems to track customer interactions and manage campaigns.
Operations ⚙️
Uses SCM systems to manage inventory, logistics, and procurement.
Finance 💰
Relies on ERP systems for accounting and financial reporting.
Human Resources 👥
Employs HRIS for payroll, recruiting, and managing employee data.
🛒 Worked Example: One Online Order, Four Systems
Sita orders a jacket from an online store in Kathmandu. Watch the order travel:
- CRM (Marketing): records Sita's purchase and sends her a thank-you coupon next week.
- ERP (Finance): books the sale, the VAT and the payment from her wallet.
- SCM (Operations): reduces stock by one and reorders when stock falls below 10.
- HRIS (HR): logs the delivery rider's completed trip for this month's pay.
One click by a customer updates every department. That is why every manager needs to understand IS.
Interactive: Match IS Systems to Business Functions
Click an IS system, then click the matching business function.
IS Systems
Business Functions
🎬 One Sale, Every Department
2. The Foundation for Data-Driven Decisions 📊
The concept of "data-driven decision-making" is brought to life by information systems.
- IS provides the tools to collect vast amounts of data.
- It processes that data into meaningful information.
- It presents insights via dashboards and reports.
Understanding IS helps you ask better questions and interpret data more accurately for smarter business outcomes.
🌀 Real Case: Walmart Reads the Storm (2004)
- As Hurricane Frances headed for Florida, Walmart studied sales data from earlier hurricanes.
- Besides torches and water, one surprise stood out: sales of strawberry Pop-Tarts rose about seven times above normal before a hurricane.
- Trucks loaded with Pop-Tarts (and beer) were sent to stores in the storm's path, and they sold quickly.
Data reveals patterns that gut feeling would miss. (Source: The New York Times, Nov 2004.)
🎬 The Pop-Tart Prediction
🧮 Worked Example: Gut Feeling vs Data
A café owner wants to drop one item. She feels sandwiches earn more because each one makes more profit. Her sales system shows a typical day (example data):
| Item | Profit per plate | Sold per day | Daily profit |
|---|---|---|---|
| Momo | Rs 130 | 80 | Rs 10,400 |
| Sandwich | Rs 200 | 20 | Rs 4,000 |
Momo earns 2.6× more each day. Profit per item misled her, and total profit tells the real story.
Interactive: Explore the Data-Driven Pipeline
Click each stage in order to see how IS transforms raw data into business insights.
1. Collect
2. Process
3. Present
3. A Source of Career Advantage
Regardless of your chosen career path, digital literacy is a key differentiator.
An employee who can leverage IS to improve a process, analyze data, or manage a project is significantly more valuable.
This knowledge leads to:
- Better job performance
- Faster career advancement
- Opportunities to lead strategic initiatives
💼 What Employers Say They Need
The World Economic Forum's Future of Jobs Report 2025 surveyed more than 1,000 employers worldwide:
- Analytical thinking is still the most sought-after core skill.
- The fastest-growing skills are AI and big data, then networks and cybersecurity, then technological literacy.
- These are exactly the skills an IS course starts to build.
You don't need to be a programmer, but you do need to know what the technology can do for the business.
Interactive: IS in Your Career — Scenario Quiz
4. Enabler of Business Innovation ⚡
New business models and disruptive innovations are often born from the clever application of technology.
Companies like Uber, Netflix, and Airbnb didn't just invent new products—they used IS to create entirely new ways of delivering services.
Uber / Pathao
Used IS to connect drivers and riders, disrupting the taxi industry.
Netflix
Used IS for streaming and recommendations, disrupting media distribution.
Airbnb
Used IS to create a marketplace for lodging, disrupting hospitality.
Interactive: IS Innovation Disruptor Match
Match each company to the IS innovation that powered their disruption, then click Check.
Uber / Pathao
Netflix
Airbnb
📉 The Other Side: Companies That Missed the Shift
📷 Kodak
A Kodak engineer built the first digital camera in 1975.
Kodak feared it would hurt film sales and held back. It filed for bankruptcy in 2012.
📼 Blockbuster
In 2000 it turned down a chance to buy Netflix for about US$50 million.
Blockbuster filed for bankruptcy in 2010.
The technology existed. What was missing were managers who understood how IS changes a business model.
🎬 Kodak's Digital Camera, 1975
Practical Application: IS in Nepal 🇳🇵
Example: Digital Wallets like eSewa & Khalti
These companies leveraged information systems to create a powerful digital payment ecosystem in Nepal.
- Simplified mobile top-ups and utility bill payments.
- Enabled e-commerce by providing a trusted payment gateway.
- Collected transaction data to understand consumer behavior and offer new services.
Result: They transformed how many Nepalis handle financial transactions, reducing reliance on cash and driving digital literacy.
National QR Payments in Asia
🧪 Activity: You Are the Manager
Your family runs a hardware shop in Butwal with 3 staff. Sales are on paper, stock is counted by hand, and customers pay in cash. You can afford one system this year.
Which one, and why?
- A point-of-sale + stock system: fixes the daily pain of lost stock and gives sales data. Many groups pick this first.
- A QR/wallet payment: cheap and fast, and gives a digital record of sales.
- A CRM: useful later, once there is customer data to use.
5. Enhancer of Communication & Collaboration
Modern information systems provide powerful tools for teamwork, essential for today's distributed and global organizations.
Core Tools Include:
- Email & Instant Messaging (e.g., Slack, Microsoft Teams)
- Video Conferencing (e.g., Zoom, Google Meet)
- Shared Digital Workspaces (e.g., Google Drive, Notion)
A formal study of IS provides insight into the best practices for using this technology to foster productivity.
🎥 Real Case: Collaboration Overnight (2020)
- When COVID-19 closed offices and campuses, work moved online almost overnight.
- Zoom's daily meeting participants jumped from about 10 million in December 2019 to 300 million in April 2020.
- Companies that already used shared drives, chat and video kept working. Others struggled for weeks.
Collaboration tools are not just convenient. They keep a business running in a crisis.
Interactive: Classify Collaboration Tools
Select a tool, then click a category box to place it. Place all 5, then check your answers.
Real-Time Messaging
Video Conferencing
Document Collaboration
Key Takeaways 🔍
- IS knowledge is essential for all business functions, not just the IT department.
- Understanding IS is the key to making effective data-driven decisions.
- Digital literacy and IS skills provide a significant career advantage.
- IS is a primary driver of business innovation and new service models.
💬 Discuss in Pairs (3 minutes)
1. Pick the career you want after your BBA. Name one information system you will use every week in that job.
2. Which Nepali business today could become the next Kodak if it ignores digital change?
3. "Only the IT department needs to understand IS." Agree or disagree, with one example.
Exam Practice 📝
Short answer
- Give three reasons why business students should study information systems.
- How do information systems support data-driven decision-making?
- How can knowledge of information systems give a graduate a career advantage?
Exam Practice 📝 (continued)
Long answer
- Explain why the study of information systems is essential for all business students, regardless of their specialisation.
- Discuss how information systems enable business innovation and improve communication and collaboration, with examples from Nepal.
Revise the answers in the full note.
Image & Video Credits
Images
- Toong Coworking Space in Hanoi: Ann0611, CC BY-SA 4.0, via Wikimedia Commons
- Hurricane Frances over Florida: Tim Loomis, NOAA/NESDIS, public domain, via Wikimedia Commons
- Infruid's Self-Service BI Tool Dashboard: Growthlakes, CC BY-SA 4.0, via Wikimedia Commons
- The Last Blockbuster storefront: UpdateNerd, CC0, via Wikimedia Commons
- Integrated QR Code Payment Systems in Asia: Bamboofirdaus, CC0, via Wikimedia Commons
Videos (YouTube)
- Connected Cookie, "ERP Explained in 3 minutes" (28–90 s)
- The Daily Viewer, "Walmart Keeps This Item in Stock Before Major Storms" (0–49 s)
- Cheddar, "Why Kodak Willingly Ignored the Future of Photography" (119–180 s); "wanted it gone" is the narrator's framing
Thank You
Any questions?
Up Next:
Chapter 3: The Components of Information Systems