Chapter-02

Information Systems (IS)

Source: Cisco, Networking Academy, Communicating over the Network, Network Fundamentals, p.11

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2.1 Introduction to Information System (IS).

Information system (IS) is the study of complementary networks of hardware and software
( Information Technology) that people and organizations use to collect, filter, process, create,
and distribute data. The study bridges business and computer science using the theoretical
foundations of information and computation to study various business models and
related algorithmic processes within a computer science discipline. Computer Information
System(s) (CIS) is a field studying computers and algorithmic processes, including their
principles, their software and hardware designs, their applications, and their impact on
society while IS emphasizes functionality over design.
Any specific Information System aims to support operations, management and decision
making. In a broad sense, the term is used to refer not only to the information and
communication technology (ICT) that an organization uses, but also to the way in which people
interact with this technology in support of business processes.
Some authors make a clear distinction between information systems, computer systems,
and business processes. Information systems typically include an ICT component but are not
purely concerned with ICT, focusing instead on the end use of information technology.
Information systems are also different from business processes. Information systems help to
control the performance of business processes.
Alter argues for an information system as a special type of work system. A work system is a
system in which humans and/or machines perform work using resources to produce specific
products and/or services for customers. An information system is a work system whose activities
are devoted to processing (capturing, transmitting, storing, retrieving, manipulating and
displaying) information.
As such, information systems inter-relate with data systems on the one hand and activity systems
on the other. An information system is a form of communication system in which data represent
and are processed as a form of social memory. An information system can also be considered a
semi-formal language which supports human decision making and action.

2.2 Functions of an Information System (IS)

The function of an information system is to enable users to access information by using the
different communication channels available in an organization. An information system refers to a
combination of information technology and people's actions whose aim is to support operations
and management. To help users to become informations competent, that means find it easy to
organize their information, search for information, analyze their information and using old
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information. For example, Mobile is technology but how a person will make phone call or send
SMS is Information Systems (IS), besides Internet is technology but how a person will send
email is IS. So, IT is Technology and IS the function of the technology.

2.3 Importance of Information and Communication Technology (ICT) in Bangladesh

Information System has generated profound changes in human society. These are quite different
from social transformations caused by earlier scientific advances. The invention of the Internet in
the end of the 20th century started the modern Management Information Systems (MIS). By the
21st Century we witness a dramatic new wave of MIS, leading to massive socio-economic
changes.
Bangladesh has placed poverty alleviation on the top of its development agenda. It is here that
MIS has a critical role to play. It is for developing countries and especially the least developed
among them to seize the opportunity and adopt MIS as a priority tool to fight hunger,
malnutrition, illiteracy, discrimination against women, children, aged and disabled. The need to
invest in ICT infrastructure and especially ICT human resources is paramount. The ICT sector of
Bangladesh is one of the fastest growing sectors of its economy. ICT has been declared as the
thrust sector by the Government. A comprehensive ICT Policy has been formulated and a
National ICT Task Force, headed by the Honorable Prime Minister, has been formed. The
Government organization entrusted for the development and promotion of the ICT sector is the
Ministry of Science and Information & Communication Technology (ICT). Bangladesh
Computer Council (BCC), the apex body for promotion of all kinds of MIS activities in the
country, works under the Ministry of Science and Information & Communication Technology
(ICT).
For the development of ICT sector within the framework of overall national development, the
Government has approved the National ICT Policy in Bangladesh. The Vision of this Policy
aims at building a strong ICT based Business Driven Technology nationwide comprising of
knowledge-based society by the year 2021.1 In view of this, a country-wide ICT-infrastructure
will be developed to ensure access to information by every citizen to facilitate empowerment of
people and enhance democratic values and norms for sustainable economic development by
using the infrastructure for human resources development, e-governance, e-commerce, ebanking, public utility services and all sorts of on-line MIS enabled services. A comprehensive
Action Plan "Roadmap for ICT Development" and Poverty Reduction planned based on the ICT
Policy, and the Millennium Development Goals (MDG) is under preparation.
The role of the Management Information Systems is an organization can be compared to the role
of heart in the body. The information is the blood and MIS is the heart. In the body the heart
plays the role of supplying pure blood to all the elements of the body including the brain.
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Management is the process of planning, organizing, leading and controlling an organizations

human, financial, physical, and information resources to achieve organizational goals in an
efficient and effective manner.
The ICT plays exactly the same role in the organization. The system ensures that an appropriate
data is collected from the various sources, processed, and sent further to all the needy
destinations. The system is expected to fulfill the information needs of an individual, a group of
individuals, the management functionaries: the managers and the top management. Managing is
necessary whenever one needs to get thing done. It may be called the practices of consciously
and continually shaping organizations. Each and every organization has people who are entrusted
with the responsibility of helping the organization achieve its goals. Those people are called
managers. No organization can carry on its business without management, which is in turn
supervised by managers.
Management is a group effort to achieve objectives under the leadership of the manager.
Management harness and coordinates four types of resources: Human, financial, physical, and
informational. The ICT helps the clerical personnel in the transaction processing and answers
their queries on the data pertaining to the transaction, the status of a particular record and
references on a variety of documents.
2.4 Define system and components of system.
A system is a group of interrelated components working together toward a common goal a by
accepting Inputs, Processing outputs in an organized transformation process.
A system can be most simply defined as a group of inter-relative elements forming a unified
whole. Many examples of systems can be found in physical and biological sciences, in modern
technology, in human society. Thus, we can talk of the physical system of the sun and its planets,
the biological system of the human body, the technological system of an oil refinery, computer
systems, and the socioeconomic systems of a business organization.
A system has three basic interacting components of Information Systems are:
Input

: Raw materials, energy, data, and Keyboard, mouse, scanner etc.

Processing : CPU, Motherboard, Cache and ROM etc.

Output

: Information, product, Monitor, projector, sound systems and Printer etc.

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Figure 2.1 Input-processing-output

2.5 Why Information Systems (IS) is importance in business? Explain.

Information system (IS) is the study of complementary networks of hardware and software that
people and organizations use to collect, filter, process, create, and distribute data. The study
bridges business and computer science using the theoretical foundations of information and
computation to study various business models and related algorithmic processes within a
computer science discipline. Computer Information System(s) (CIS) is a field studying
computers and algorithmic processes, including their principles, their software and hardware
designs, their applications, and their impact on society while IS emphasizes functionality over
design.
Any specific Information System aims to support operations, management and decision making.
In a broad sense, the term is used to refer not only to the information and communication
technology (ICT) that an organization uses, but also to the way in which people interact with this
technology in support of business processes.
Some authors make a clear distinction between information systems, computer systems, and
business processes. Information systems typically include an ICT component but are not purely
concerned with ICT, focusing instead on the end use of information technology. Information
systems are also different from business processes. Information systems help to control the
performance of business processes.

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Alter argues for an information system as a special type of work system. A work system is a
system in which humans and/or machines perform work using resources to produce specific
products and/or services for customers. An information system is a work system whose activities
are devoted to processing (capturing, transmitting, storing, retrieving, manipulating and
displaying) information.
As such, information systems inter-relate with data systems on the one hand and activity systems
on the other. An information system is a form of communication system in which data represent
and are processed as a form of social memory. An information system can also be considered a
semi-formal language which supports human decision making and action.
2.6 What are the Information Systems (IS) Resources? Explain.
Information Systems Resources enables the use of information systems in administrative
functions so that those functions may be conducted in the most effective way possible. There are
5 (five) components of Information Systems Resources:
a) People b) Hardware c) Software d) Data and
e) Network
a) People Resources:
1) End users (users, computer operator, and Clients)
2) IS Specialist (programmer, software engineers, web developer)
b) Hardware Resources:
1)
2)
3)
4)

Input: Keyboard, mouse, scanner etc.

Processing: CPU, Motherboard, DVD drive, Cache and ROM etc.
Output: Information, Product, Monitor, Projector, sound systems and Printer etc.
Storages Hardware: Hard Disk, Server, Pen drive, CD-ROM, and Storage Area Network.

c) Software Resources:
1) Application Software: MS-Word, Excel, Power point, and MS-Access.
2) Operation Systems (OS) : Windows, Unix, and Mac/OS.
d) Data Resources:
1) Data : Data are raw facts, or observations, typically abut physical phenomena or business
transaction.
2) Information: Meaningful and Significant word or sentence or number.
e) Network Resources:
1. Terminals are the starting and stopping points in any telecommunication network
environment. Any input or output device that is used to transmit or receive data can be
classified as a terminal component.
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2. Telecommunications processors support data transmission and reception between

terminals and computers by providing a variety of control and support functions. (i.e.
Modem, Router, Switch, HUB etc.)
3. Telecommunications channels are the way by which data is transmitted and received.
Telecommunication channels are created through a variety of media of which the most
popular include copper wires and coaxial cables (structured cabling). Fiber-optic cables
are increasingly used to bring faster and more robust connections to businesses and
homes. (cable, satellites, wifi etc.)
4. In a telecommunication environment Computer server are connected through media to
perform their communication assignments. (Data warehouse, SAN )
5. Telecommunications control software is present on all networked computers and is
responsible for controlling network activities and functionality. (network software)

2.7 What are the Information Systems (IS) activities? Explain.

The major activities of an Information Systems are:
(a) Input of data resource:
Data about business transactions and other events must be captured and prepared for
processing by the input activity. Input typically takes the form of data entry activities such as
recording and editing. End uses typically record data about transactions on some type of
physical medium such as paper form, or enter it directly into a computer system. This usually
includes a variety of editing activities to ensure that they have recorded data correctly. Once
entered, data may be transferred onto a machine-readable medium such as a magnetic disk
until needed for processing.
For example, data about sales transactions can be recorded on source documents such as paper
sales order forms. (A source document is the original formal record of a transaction).
Alternately, salespersons can capture sales data using computer keyboards or optical scanning
devices; they are visually prompted to enter data correctly by video displays. This provides
them with a more convenient and efficient user interface, that is, methods of end user input
and output with a computer system. Methods such as optical scanning and displays of menus,
prompts, and fill-in-the-blanks formats make it easier for end users to enter data correctly into
an information system.
(b) Processing of data into information:
Data is typically subjected to processing activities such as calculating, comparing, sorting,
classifying, and summarizing. These activities organize, analyze and manipulate data, thus
converting them into information for end users. The quality of any data stored in an
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information system must also be maintained by a continual process of correcting and updating
activities.
For example, data received about a purchase can be (1) added to a running total of sales
results, (2) compared to a standard to determine eligibility for a sales discount, (3) sorted in
numerical order based on product identification numbers, (4) classified into product categories
(such as food and nonfood items), (5) summarized to provide a sales manager with information
about various product categories, and finally, (6) used to update sales records.
(c) Output of information products:
Information in various forms is transmitted to end-users and made available to them in the
output activity. The goal of information systems is the production of appropriate information
products for end users. Common information products messages, reports, forms, and graphic
images, which may be provided by video displays, audio responses, paper products, and
multimedia. For example, a sales manager may view a video display to check on the
performance of a salesperson, accept a computer-produced voice message by telephone, and
receive a printout of monthly sales results.
(d) Storage of data resource:
Storage is a basic system component of information systems. Storage is the information system
activity in which data and information are retained in an organized manner for later use. For
example, just as written text material is organized into words, sentences, paragraphs, and
documents, stored data is commonly organized into fields, records, files, and database. This
facilitates its later use in processing or its retrieval as output when needed by users of a system.
(e) Control of system performance:
An important information system activity is the control of its performance. An information
system should produce feedback about its input, processing, output, and the system is meeting
established performance standards. Then appropriate system activities must be adjusted so
that proper information products are produced for end users.
For example, a manager may discover that subtotals of sales amounts in a sales report do not
add up to total sales. This might mean that data entry or processing procedures need to be
corrected. Then changes would have to be made to ensure that all sales transactions would be
properly captured and processed by a sales information system.

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2.9 Classification of Information Systems (IS).2

Operations Support Systems (Support of the daily business operation):
a) Transactions Processing Systems (TPS)
b) Process Control Systems (PCS)
c) Enterprise Collaboration Systems (ECS)
Management Support Systems (Support of managerial decision making)
1. Management Information Systems (MIS)
2. Decision Support Systems (DSS)
3. Executive Information Systems (EIS)
Information
Systems

Support of the
Business

Support of the
Managerial
Decision Making

Operations

Operation
Support
Systems

Transaction
Processing
Systems
1

Process
Control
Systems
2

Management
Support
Systems

Enterprise
Collaboration
Systems
3

Management
Information
Systems
4

Decision
Support
Systems
5

Executive
Information
Systems
6

Systems

Figure 1.7 Source: O Brien, James A.(2004). Management Information Systems, New Delhi: McGraw-Hill Publication Co. Ltd. p.23

1. Transaction Processing Systems (TPS)- Processing business transaction.

A transaction processing system is a kind of information system that collects stores and retrieves data
and sometimes controls decisions made as part of a transaction.
Transaction processing is a style of computing that divides work into individual, indivisible operations,
called transactions. A transaction processing system (TPS) or transaction server is a software system, or
software, hardware combination that supports transaction processing.
a) system that collect, store the transaction data and process it.
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b)
c)
d)
e)
f)
g)

Page 23

this system will record daily transaction and process it real time or collect the data for
certain period of time then only process it in batch.
the most common example real time transaction processing for that happen in our life is
Automated Teller Machine (ATM) transaction.
when we take money from ATM, directly the bank will record our transaction and then
deduct the amount of money in our accounts.
the batch processing is doing by bank when it want to generate report of cash in or out in a
certain week or certain month.
this process is hide from public like you and me.
this system only record the transaction information and is a basic for an organization and
this information will help in decision making by higher management in an organization.

A transaction processing systems (TPS) is exactly what its name implies-a system that process
transactions within an organization. TPSs include payroll systems, inventory stocking systems, sales
processing systems, and a host of others. It is incumbent on organization to support these types of
functions in the operationally efficient way. This will add to our bottom-line profits by reducing costs. 3
a) Batch processing
Batch processing is execution of a series of programs (jobs) on a computer without manual
intervention. Several transactions, called a batch are collected and processed at the same time.
The results of each transaction are not immediately available when the transaction is being
entered; there is a time delay.

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b) Real-time computing
Real time systems attempt to guarantee an appropriate response to a stimulus or request
quickly enough to affect the conditions that caused the stimulus. Each transaction in real-time
processing is unique; it is not part of a group of transactions.
c) Time sharing
Time sharing is the sharing of a computer system among multiple users, usually giving each user
the illusion that they have exclusive control of the system. The users may be working on the
same project or different projects, but there are usually few restrictions on the type of work
each user is doing.
d) Transaction processing
Transaction processing systems also attempt to provide predictable response times to requests,
although this is not as critical as for real-time systems. Rather than allowing the user to run
arbitrary programs as time-sharing, transaction processing allows only predefined, structured
transactions. Each transaction is usually short duration and the processing activity for each
transaction is programmed in advance.

2. Process Control Systems- Control of the industrial processes.

Process Control Systems is systems that control and monitor the physical and industrial processes. The
operations that are associated with process control have always existed in nature. Such natural process
control can be defined as any operation that regulates some internal physical characteristic that is
important to a living organism.
Examples of natural regulation in humans include body temperature, blood pressure, and heart rate. Early
humans found it necessary to regulate some of their external environmental parameters to maintain life.
This regulation could be defined as artificial process control or more simply as process control, as we
will refer to it in this book. This type of process control is accomplished by observing a parameter,
comparing it to some desired value, and initiating a control action to bring the parameter as close as
possible to the desired value. One of the first examples of such control was early mans use of fire to
maintain the temperature of his environment.

3. Enterprise Collaboration System (ECS)- Team and workgroup collaboration.

Enterprise Collaboration System (ECS) are cross-functional e-business systems that enhance
communication, coordination, and collaboration among the members of business teams and workgroups.
Information technology, especially Internet technologies, provides tools to help us collaborate to
communicate ideas, share resources, and coordinate our cooperative work effects as members of the many
formal and informal process and project teams and workgroups that make-up many of todays
organizations. Thus, the goal of enterprise collaboration systems is to enable us to work together more
easily and effectively by helping us to:
i.

Communicate: Sharing information with each other.

ii.

Coordinate: Coordinating our individual work efforts and use of resource with each others.
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Collaborate: Working together cooperative on joint projects and assignments.

4. Management Information Systems (MIS)

Management Information System (MIS) is a system that provides information needed to mange
organizations effectively. MIS is the study of people, information, technology, products, organizations
and the relationships among them.
Management Information System (MIS) is computer-based information systems that provide useful,
complete, and timely information. This information must support management decision making in a
rapidly changing business environment. The MIS systems must supply managers with information
quickly, accurately and completely. 4

Management Information System (MIS) also called information reporting systems, provide
middle management with report that summarize and categorize information derived from the
entire company database. The purpose of the report is to allow management to spot trends
and to get an overview of current business activities, as well as to monitor and control
operational- level activities.
Management information system (MIS) is the process of managing employees and the functions
associated with the job system. DSS is considered making the right decision based on operations,
forecast, activities, planning and management.
5. Decision Support Systems (DSS)
A Decision Support System (DSS) is a computer-based information system that supports
business or organizational decision-making activities. DSSs serve the management, operations,
and planning levels of an organization (usually mid and higher management) and help to make
decisions, which may be rapidly changing and not easily specified in advance (Unstructured and
Semi-Structured decision problems). Decision support systems can be either fully
computerized, human or a combination of both.
DSSs include knowledge-based systems. A properly designed DSS is an interactive softwarebased system intended to help decision makers compile useful information from a combination
of raw data, documents, and personal knowledge, or business models to identify and solve
problems and make decisions.
6. Executive Information Systems (EIS)
An executive information system (EIS) is a type of management information system that
facilitates and supports senior executive information and decision-making needs. It provides
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easy access to internal and external information relevant to organizational goals. It is commonly
considered a specialized form of decision support system (DSS).
EIS emphasizes graphical displays and easy-to-use user interfaces. They offer strong reporting
and drill-down capabilities. In general, EIS are enterprise-wide DSS that help top-level
executives analyze, compare, and highlight trends in important variables so that they can
monitor performance and identify opportunities and problems. EIS and data warehousing
technologies are converging in the marketplace.
2.8 What are the major roles of Information Systems (IS)? Explain.
The three major roles of the business applications of information systems provide an organization with
support for business process and operations, decision making, and competitive advantage.
Three major roles of information systems are:
1. Support of Strategic Advantage (Competition strategy)
2. Support of Managerial decision-making
3. Support of Business Operation

1. Support of Business Process: As a consumer, we have to deal regularly with the information systems
that support the business processes and operations at the many retail stores where our shop. Fr
example, most retail stores now use computer-based information systems to help them record
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customer purchases, keep track of inventory, pay employees, buy new merchandise, and evaluate sales
trends. Store operations would grind to a halt without the support of such information systems.
2. Support Decision Making: Information system also help store managers make better decisions and
attempt to gain a strategic competitive advantage. For example, decisions on what lines of merchandise
need to be added or discontinued, or on what kind of investment they require, are typically made after
an analysis provided by computer-based information systems. This not only supports the decision
making of store-managers but also helps them look for ways to gain an advantage over other retailers in
the competition for customers.
3. Support Competitive Advantage: Gaining a strategic advantage over competitors requires innovative
use of information technology. For example, store managers might make a decision to install
computerized touch-screen catalog ordering systems in all of their stores, tied in with computer-based
telephone ordering systems and an Internet-based computer shopping network. This might attract new
customers and lure customers away from competing stores because of the ease of ordering
merchandise provided by such innovative information systems. Strategic information systems can help
provide strategic products and services that give a business organization a comparative advantage over
its competitors.

2.10 Accounting Information System (AIS)

Accounting Information System (AIS) are the oldest and most widely used information systems
in business. An accounting information system is a system of collection, storage and processing
of financial and accounting data that is used by decision makers. AIS are generally a computerbased method for tracking accounting activity in conjunction with information technology
resources. The resulting statistical reports can be used internally by management or externally by
other interested parties including investors, creditors and tax authorities. The actual physical
devices and systems that allows the
Accounting Information System-Almost all accounting systems are computerized. The
accountant must know to operate the software and be able to quickly learn new software as the
technology changes.5
AIS to operate and perform its functions:
a)

b)
c)
d)
e)

Order Processing
Inventory control
Accounts Receivable
Accounts payable
General Ledger
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Payroll

Questions
1. Define Information Systems (IS).
2. What are the differences between TPS vs PCS, MIS vs DSS and ECS vs EIS? Explain.
3. What are the functions of an Information System (IS)?
4. Write importance of Information and Communication Technology (ICT) Bangladesh.
3. Discuss the Classification of Information Systems (IS). Explain.
4. Explain the three major roles of Information Systems (IS) in Business.
5. Mention the importance of Information Systems. Explain
6. Do you think that ICT learning is importance for business professional? Why?
Explain.
7. What Transaction Processing Systems (TPS)? Write Transaction Processing Systems cycle
with figure.
8. Define system. What are the three basic interacting components of system? Explain.
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9. What are the Information Systems (IS) Resources? Explain.

10. Write five basic Information Systems (IS) activities. Explain.
11. Point out the problems of Information System in Bangladesh.

References
1 Software & IT Service Catalog. P. 10
2 Ibid, p.23
3 Haag, Stephan et.el. (2006). Information Systems Essentials, New York: McGraw-Hill.p.40
4 Hutchinson, et.el (2003), Computer and Information Systems, USA: IRWIN. p.381
5 Haag, Stephan et.el. (2006). Information Systems Essentials, New York: McGraw-Hill.p.5

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