IBBusinessDPBusiness ManagementHLRevision Notes5. Operations Management5.9 Management Information SystemsInformation System Terminology

Information System Terminology (DP IB Business Management)

Revision Note

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Lisa Eades

Expertise

Business Content Creator

Key Information System Terminology

Data Analytics

  • Data analytics involves transforming raw data into useful information to uncover patterns, correlations, trends and insights 

  • Data analytics has become increasingly important to businesses in today's data-driven world

    • It helps organisations to gain a competitive advantage and make informed decisions

    • Data-driven decision making tends to be less risky than pursuing hunches

Diagram: illustrating key components of data analytics

Data Analytics involves the collection, cleaning & preparation, analysis, visualisation and interpretation of data before communicating to stakeholders
Data Analytics involves the collection, cleaning & preparation, analysis, visualisation and interpretation of data before communicating to stakeholders

Types of Data Analytics

Descriptive

Diagnostic

  • Analysis focuses on past business performance 

    • Summarise sales data over a given period

    • Identify periods of high and low spending/costs

    • Show periods of success and failure

  • Analysis focuses on reasons for past performance

    • Make links between promotional spending and sales

    • Correlate employee performance with quality

    • Examine the impact of capital spending on output

Predictive

Prescriptive

  • Analysis focuses on likely future performance

    • Make sales forecasts

    • Predict changes in costs

    • Determine future staffing needs

  • Analysis leads to recommendations for actions/decisions

    • Changes in marketing strategy

    • Implement recruitment drives

    • Enter new markets

Databases

  • A database provides a structure for stored data 

  • Typically electronic databases allow for swift data input, storage, protection and retrieval of information

  • Setting up and maintaining databases can be costly

    • Data must be kept secure

    • Database managers may be required to ensure databases are fit for purpose

Diagram: database use in a university

Universities use database systems for many reasons, including student and employee information systems, library management and attendance tracking
Universities use database systems for many reasons, including student and employee information systems, library management and attendance tracking

Cybersecurity & cybercrime

  • Cybersecurity includes systems used to protect computer networks from theft or unauthorised access of data

  • Cybercrime is illegal activity related to the use of computer or network devices

    • It is often related to financial or commercial gain 

    • It is a significant risk to business - according the UK government cybercrime cost British businesses an average of £1,100, with 69% of large businesses reporting a significant cyber-attack in 2022

      Common Forms of Cybercrime

Form

Description

Phishing

  • Tricking individuals or businesses into providing sensitive information such as passwords or credit card numbers by posing as a trustworthy organisation in electronic communications

Ransomware/Malware attacks

  • Malicious software includes viruses, worms, Trojans and spyware designed to disrupt, damage or gain unauthorised access to computer systems

  • Ransomware is a type of malware that encrypts users' files and demands a fee to be paid for their release

Identity theft

  • Stealing personal information such as social security numbers or credit card details to commit fraud or other related crimes

Email/internet fraud

  • Schemes distributed via online communications designed to deceive individuals for financial gain such as online shopping scams or investment fraud

Intellectual property theft

  • Theft, unauthorised use or piracy of others' creations, trademarks or copyrighted material

Account hijacks

  • Distributed Denial of Service (DDoS) attacks involve overwhelming a website or online service with traffic, causing it to become slow or unavailable

  • A business can protect itself against cybercrime in a number of ways

Ways to Protect Business Systems from Cybercrime

Method

Explanation

Employee training and awareness

  • Train employees on cybersecurity best practices

  • Raise awareness about phishing attacks

  • Encourage a culture of security consciousness within the business

Regular security audits & access control

  • Conduct regular cybersecurity audits to identify vulnerabilities

  • Test the effectiveness of security measures

  • Stay informed about the latest cybersecurity threats

  • Grant only necessary access rights to groups of users

  • Regularly review user access - especially when staff leave the business

Strong password & encryption policies

  • Enforce complex password requirements

  • Implement multi-factor authentication (MFA) for added security

  • Encrypt sensitive data both in transit and when stored

Backup and recovery

  • Regularly back up critical data and systems

  • Test data restoration procedures to ensure quick recovery in case of an attack

  • Develop an incident response plan including clearly-defined roles and responsibilities in case of a security incident

Exam Tip

Despite taking all possible steps to protect their IT systems, businesses that increasingly rely on technology to manage key business processes are at risk from cybercrime

Business continuity following disruptions to IT systems is an important part of contingency planning and must be updated regularly to be effective against the latest risks

Critical Infrastructures

  • Critical infrastructures are IT-based systems and facilities that are central to the effective operation of a business

  • Examples of critical infrastructures include

    • Artificial neural networks

    • Data centres

    • Cloud computing

  • Artificial neural networks (ANNs) are computer systems inspired by the way the human brain works

    • They automate business tasks in some well-known businesses 

      • Chatbots are used by businesses such as Next Retail to respond to customer service queries

      • Insurance companies such as Admiral use ANN's to detect fraud in insurance claims where unusual patterns  need to be identified

      • Manufacturers including Toyota and Hyundai use ANN's to monitor machinery and predict when equipment is likely to fail so timely maintenance tasks can be carried out

      • Large retailers such as Tesco use ANNs to monitor temperatures in stores' refrigerated units to ensure that perishable goods are stored safely

  • Data centres are physical spaces that hold important applications and data on behalf of a business

    • Their components include mainframes, servers, routers, firewalls and storage systems

    • Services such as data backup, security, database management and storage, email and file sharing and virtual communications systems are provided by data centres

  • Cloud computing is similar to a data centre though applications and data are stored online rather than in a physical location

    • Examples include Google Drive, Dropbox and Apple's iCloud

    • Remote servers and online networks are used to store and share data

Virtual Reality, the Internet & Artificial Intelligence

Virtual reality

  • Virtual reality (VR) allows users to explore and interact with a realistic 3-dimensional (3D) environment created using software

    • VR can be used in a number of ways by businesses

Business use of Virtual Reality 

Use

Explanation

Examples

Education and training

  • Simulations: VR is used for training allowing practice in realistic scenarios without real-world consequences

  • Virtual Classrooms: VR enables students to explore subjects in an engaging way

  • United Airlines uses VR applications to train pilots and ground staff in safety and emergency procedures

  • EdApp’s Virtual Classroom can be used to deliver short-form interactive content on any compatible electronic device

Retail

  • Virtual Shopping: Retailers use VR to create virtual stores that allow customers to shop from the comfort of their homes

  • Product Prototyping: VR is used to visualise designs and develop 3-D prototype products at low cost

  • IKEA uses VR to create a virtual showroom where customers can visualise purchases by customising room layouts, materials and colours

  • Jaguar Land Rover uses VR to create full-size 3D models of components and entire vehicle before the physical parts are built

Entertainment

  • Gaming: VR is widely used in the gaming industry to provide immersive gaming experiences with the use of VR headsets

  • Virtual Theme Parks: Amusement parks and entertainment venues use VR in rides

  • Beat Games' Beat Saber is a rhythm game where players wear a VR headset and move their limbs around glowing sabers to the beat of a musical track

  • Amusement park Alton Towers uses VR to enhance customer experience on its Galactica rollercoaster

  • In addition, virtual reality can help businesses to deliver realistic training and has been used by some large businesses to develop immersive advertising

The Internet of things

  • The Internet of Things (IoT) refers to the connection of everyday objects to the internet which allows them to send and receive data for various purposes

    • In an IoT system tasks are performed with little or no human intervention

    • Devices can range from simple household items such as refrigerators and smart speakers to complex industrial machinery

  • Businesses such as Amazon have enjoyed commercial success with devices such as the Echo and its Alexa software

  • Devices can also be used within businesses to improve the efficiency of processes 

    • Volvo car dealerships use data from embedded sensors in vehicles to offer timely maintenance to owners and ensure appropriate parts are in stock

    • Smart climate control systems are used in Sainsbury's supermarket distribution hubs to ensure perishable goods are not wasted

Artificial Intelligence

  • Artificial intelligence (AI) allows machines to complete tasks that normally require human intelligence or reactions

  • Although in its infancy, some businesses are enjoying considerable commercial success in the field
     

Examples of Top AI Businesses in 2023

Google (Alphabet Inc)

Amazon Web Services

  • Major player in AI with applications in search, language processing and image recognition

  • Uses AI extensively in e-commerce operations and Alexa, its virtual assistant, is powered by AI

 Tesla

OpenAI  

  • Leading in incorporating AI into the automotive industry, particularly in the development of self-driving technology

  • Known for its research and development into AI with a stated aim of ensuring that the technology benefits all of humanity

  • AI can carry out numerous business functions and improve their efficiency

    • In Human Resources AI filters job applications and compiles shortlists for interview

    • Logistics have been improved by the use of AI-powered tools such as Google Maps which gather and process real time travel conditions

    • AI manages some customer service functions, powering chatbots and improving the efficiency of search engines

    • Automatic payment systems such as Paypal incorporate AI to improve financial management

Exam Tip

At the time of writing governments around the world are considering taking steps to monitor and control the use and capabilities of AI

It is worthwhile keeping up with steps they take to protect individuals over the next few years - showing a contemporary understanding can improve the quality of your analysis and judgements

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Lisa Eades

Author: Lisa Eades

Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.