Anda di halaman 1dari 30

Basic Concepts of Information System

Objectives:

1. To understand the role of data and information in today’s business


enterprise.
2. To study the organization as a structure and its different functional layers
3. To explain business processes and their working in synergy to achieve
organizational goals.
4. Understanding system concepts.
5. To understand the components and working of a system.
6. Explain why knowledge of information systems is important for business
professionals.
7. To understand the relevance and utility of Information systems
8. Give examples to illustrate how the business applications of information
systems can support a firm’s business processes, managerial decision-
making, and strategies for competitive advantage.
9. Provide examples of several major types of information system of business
organizations in the real world.
Introduction

An understanding of the effective and responsible use and management of


information systems is important for managers, business professionals, and other
knowledge workers in today’s networked enterprises. Information systems play a
vital role in the e-business and e-commerce operations, enterprise collaboration
and management, and strategic success of businesses that must operate in a
networked global environment.

An information system uses the resources of people, hardware, software, data, and
networks to perform input, processing, output, storage, and control activities that
convert data resources into information products. Data are first collected (input)
and converted to a form that is suitable for processing. Then the data are
manipulated and converted into information (processing), stored for future use
(storage), or communicated to their ultimate user (output) according to correct
processing procedures (control).

Today’s business environment is essentially global – There is a need to improve


the efficiency and effectiveness of the business processes for competitive
advantage.
The art of management is all about decision making. Decision making can no
longer be ad hoc in nature – it must be backed by lots of facts and figures and
resultant information. Each decision taken has an effect on the organization hence
the role of data and resultant information is of extremely vital.

1.1 Data:
It is a set of facts and figures – which are random, unorganized, are not classified,
ordered or sorted. They do not convey much meaning. They are raw facts or
observations, typically about physical phenomena or business transactions. More
specifically, data are objective measurements of the attributes (characteristics) of
entities, such as people, places, things, and events.
1.2 Data Resources:
Data constitutes a valuable organizational resource. Thus, data resources must be
managed effectively to benefit all end users in an organization. The data resources
of information systems may be typically organized into Databases which are a
collection of logically related records or files. A database consolidates many
records previously stored in separate files so that a common pool of data records
serves many applications.

1.3 Process:
They may be any set of tabulations, sorting, comparisons, calculations done on the
data to make it more meaningful. They may be procedures or work flows for
conversion of data into meaningful information.
Thus data is subjected to a “value-added” process (data processing or information
processing) where:
• Its form is aggregated, manipulated, and organized.
• Its content is analyzed and evaluated
• It is placed in a proper context for a human user

1.4 Information:
This is data which has been tabulated, sorted, classified etc. It conveys meaning
and gives a picture of the object/event under consideration to specific end users.
Thus Information is processed data, which has been placed in a meaningful and
useful context for an end user.
Fig 1.3 A

Attributes of Information:
1. Timely
1. Accurate
2. Relevant
3. Complete, integrity, consistency, validity, etc.
Fig 1.4 A

Summary:

Information processing (or data processing) activities include the following:


• Input of data resources
• Processing of data into information
• Output of information products
2.1 Organization Structure (Levels of Management)

Fig 2.1 A

Each organization has a structure which facilitates its chain of command. The
management of an organization can broadly be divided into three overlapping
layers. Usually the organization is viewed as a triangle depicting the hierarchy and
diminishing number of employees with the increasing levels of management.

The top level of management is focused on chalking out long term tactics and
strategies for the organization. They are largely involved in futuristic perspectives.
They try to work out plans for the organization which can help them achieve their
vision and mission. They also have to counter the intense competition of the
markets.

Middle management carries out the programs and plans of senior management.
The most important activity of the next stratum of management is control. The top
management sets the targets and strategies of the operations with a long term
perspective.
The long term plans are then converted into short term and measurable targets. A
path to achievement of the vision is clearly laid out. This path then helps the actual
operations of the organization to monitor their progress and achievements.
Deviations within permissible limits may be allowed but any major shortfalls are
immediately addressed and lead to precautionary and remedial measures being
taken to put the process back in control.

The bottom most layers may be considered to consist mainly of lower levels of
management – usually in charge of the daily routine operations of the business
organization. These routine day to day transactions generate large quantities of
detailed data. Any transaction or operations of the lower strata of the organization
usually involves procedures which are highly structured in nature. They usually
follow a non deviating routine; these procedures then can hence be easily
converted into computer programmes of the intended software.
Summary:
Thus the three levels of management deal with data and its progressively
processed forms. The lower levels of management deal with extremely detailed
data. This is voluminous and some parts of it may be irrelevant. Every transaction
or unit activity taking place in the organization generates a trail of data. This data
is then processed, and starts giving a comprehensive picture for the middle
management to accomplish their tasks of ensuring the systems are in control. This
is the further analyzed and studied for trends and patterns to become the
knowledge capital for the top levels of management. This knowledge management
then becomes a tool for corporate warfare.
3.1 Business Process: The procedure or the work flow of doing any task is called
a business process. It may also be defined as the manner in which work is
organized and coordinated to produce the required product and service. The data
generated due to a transaction in an organization is converted into information in
the work flow of a business process. The analysis of this resultant information is
then used for control of the operations of an organization by comparing results to
established company goals and helping to identify problem areas and opportunities
for improvement. This data and information forms an important input for short
term or long term planning.

Fig. 3.1 A
3.2 System:

A group of interrelated components, with a clearly defined boundary, working


together towards a common goal by accepting inputs and producing outputs in an
organized transformation process is called a system.
A system maybe composed of several smaller subsystems. Each of the system has
its own sub goal, takes it input, does some processing and then converts it into
output according to the goal /objective in perspective. The subsystems need to
work with each other with synergy so that the objective of the parent system is
achieved. The subsystems may have interfaces with each other in terms of
communication or documents. This collaboration is important for the success of
the system as a whole

A system (sometimes called a dynamic system) has three basic interacting


components or functions. These include:

Input:
It involves capturing and assembling elements that enter the system to be
processed. This may be data which is requiring transformation.

Process:
It involves transformation processes that convert input into output. This may be an
activity or a combination of activities which may be classification, sorting,
tabulation, calculation etc which may be aimed at converting of data into
information for the end-user.

Output:
Output involves transferring elements that have been produced by a transformation
process to their ultimate destination. This is the result of the process and this may
be used for analysis, working out of trends, future projections and predictive
decision making.
.
Feedback:
A fourth dimension can be added to the above, that of feedback. Feedback is a
very important process for any managerial action. An understanding of the
problems faced by the end users may go a long way in the improvement of the
process. Feedback provides data about the performance of the system.

Other System Characteristics:


A system does not exist in a vacuum; rather, it exists and functions in an
environment containing other systems.
Subsystem: A system that is a component of a larger system, where the larger
system is its environment.
System Boundary: A system is separated from its environment and other systems
by its system boundary.
Interface: Several systems may share the same environment. Some of these
systems may be connected to one another by means of a shared boundary, or
interface.
Open System: A system that interacts with other systems in its environment is
called an open system (connected to its environment by exchanges of inputs and
outputs).
Adaptive System: A system that has the ability to change itself or its environment
in order to survive is called an adaptive system
Summary:

Input Process Output

Hence the systematic conversion of data into information, to aid and enhance the
process of decision making is an important managerial activity.

4.1 Information Systems:


Any organized combination of people, hardware, software, communications
networks, and data resources that retrieves, stores, transforms, and disseminates
information in an organization.
In an information system, people use hardware, software, data and networks as
resources to perform input, processing, output, storage, and control activities that
transform data resources into information products.

Need for IS and Impact of IT on an Organization

There is a need for each organization to analyze its operational data as each and
every company is facing global competition. No longer is the competition
restricted to geographical domains. The competition is with multi national
companies or even with e-commerce where the consumer has diverse avenues to
not only to make his final choice but also in terms of initial enquiries and FAQ s
of the product in question. Even the after sales service/suggestions and complaints
have been re-routed to an IT enabled medium. CRM thus acquires a new
dimension with immediate feedback and complaint redress.

Thus there is an urgent need for the companies to work with their maximum
efficiency & effectiveness to be able to withstand the onslaught of the intense
competition.

There is another very subtle advantage – that of increased transparency and the
resultant accountability of processes and organizations. Each activity that is
mapped electronically leaves an auditable trail.

There is also the far reaching effect of IT and IS on organizations that of


Enterprise Collaboration Systems which can be defined as the use of software
tools to support communication, coordination, and collaboration among the
members of networked teams and workgroups.
The collaboration between the stake holders increases manifold. The free flow of
data (EDI) and prompt payments (EFT) have a cascading effect on all departments
of the business and contribute immensely to bottom lines by decreasing operation
costs and thus maximizing profits.
Fig 4.1 A

In these days of global proximities, IT can become the cause and driver of
organization renewal and innovation which can give immense gains as an agile
competitor. It has become simply “infrastructural costs”
Objective Type Questions

Q1 An information system is a combination of hardware, software, and data


resources that transforms information in an organization.
• True
• False

Q2 There are three fundamental reasons for all business applications of


information technology. They relate to the three vital roles that information
systems can perform for a business enterprise. One of these roles is support of its
business processes and operations.
• True
• False

Q3 In any organization, end users rely on many types of information systems


like:

A) Simple manual (paper-and-pencil) information systems.


B) Formal (written procedures) and informal (word-of-mouth) systems.
C) Computer-based information systems.
D) All of the above.

Q4 Within the context of an information system, which one of the following


would be considered a typical end user?:
A) Managers.
B) Accountants.
C) Customers.
D) All of the above.
6.0 Types of IS
Resources and components of Information System, integration and automation of
business functions and developing business models. Role and advantages of
Transaction Processing System, Management Information System, Expert Systems
and Artificial Intelligence, Executive Support Systems and Strategic Information
Systems.

Introduction:
E-business is all about going much beyond just the use of the Net, It is about the
combination with other technologies and forms of electronic communication, to
enable any type of business activity
This chapter introduces the fast-changing world of business applications of
information technology, which increasingly consists of what is popularly called e-
business applications. E-business is the use of the Internet and other networks and
information technologies to support electronic commerce, enterprise
communications and collaboration, and Web-enabled business processes, both
within a networked enterprise and with its customers and business partners.

Objectives:

1. Identifying the various cross-functional enterprise systems, and giving


examples of how they can provide significant business value to a company.
2. Understanding Transaction Processing Systems.
3. To identify several basic competitive strategies and explain how they can
use information technologies to confront the competitive forces faced by a
business.
6.1 An IS has the following components.
• People – end users and IS specialists
• Hardware – physical devices and materials used in information processing
including computer systems, peripherals, and media
• Software – sets of information processing instructions including system
software, application software and procedures
• Data – facts or observations about physical phenomena or business
transactions. Any unit event or activity in an organization generates data.
• Network – communications media and network infrastructure
• Communications Media – examples include twisted-pair wire, coaxial and
fiber-optic cables, microwave, cellular, and satellite wireless technologies
• Network Infrastructure – examples include communications processors
such as modems and inter-network processors, and communications control
software such as network operating systems and Internet browser packages
Fig 6.1 A

Functional business systems are composed of a variety of types of information


systems (transaction processing, management information, decision support, etc.)
that support the business functions of:

• Accounting
• Finance
• Marketing
• Productions/operations management
• Human resource management
There is a strong emphasis in many organizations to develop such composite or
cross-functional information systems that cross the boundaries of traditional
business functions in order to reengineer and improve vital business processes.
These organizations view cross-functional information systems as a strategic way
to share information resources and improve the efficiency and effectiveness of a
business, thus helping it attain its strategic objectives.

Business firms are turning to Internet technologies to integrate the flow of


information among their internal business functions and their customers and
suppliers. Companies are using the World Wide Web and their intranets and
extranets as the technology platform for their cross-functional and inter-
organizational information systems.

Examples:

Marketing Systems:
Marketing information systems integrate the information flow required by many
marketing activities. Marketing information systems provide information for:
• Internet/intranet websites and services make an interactive marketing
process possible where customers can become partners in creating,
marketing, purchasing, and improving products and services.
• Sales Force Automation Systems use mobile computing and Internet
technologies to automate many information processing activities for sales
support and management. Increasingly, computers and networks are
providing the basis for sales force automation. In many companies, the
sales force is being outfitted with notebook computers that connect them to
web browsers, and sales contact management software that connect them to
marketing websites on the Internet, extranets, and their company intranets.
• Characteristics of sales force automation include:
o Increases the personal productivity of salespeople.
o Dramatically speeds up the capture and analysis of sales data from
the field to marketing managers at company headquarters.
o Allows marketing and sales management to improve the delivery of
information and the support they provide to their salespeople.
o Many companies view sales force automation as a way to gain a
strategic advantage in sales productivity and marketing responsiveness.
• Interactive marketing: Customers are not passive participants, but are
actively engaged in a network-enabled proactive and interactive process. It
encourages customers to become involved in product development,
delivery, and service issues. This is enabled by various Internet
technologies, including chat and discussion groups, Web forms and
questionnaires, and e-mail correspondence.
• Targeted Marketing: Companies can customize their web advertising
messages and promotion methods to appeal to people in specific
communities. These can be communities of interest, such as virtual
communities of online sporting enthusiasts or arts and crafts hobbyists, or
geographic communities formed by the websites of a city or other local
organizations.
o Content – advertising such as electronic billboards or banners can be
placed on various website pages, in addition to a company’s home
page. These messages reach the targeted audience.
o Context – advertising appears only in Web pages that are relevant to
the content of a product or service. So advertising is targeted only at
people who are already looking for information about a subject
matter that is related to a company’s products.
o Demographic/Psychographic – marketing efforts can be aimed only
at specific types or classes of people: unmarried, twenty-something,
middle income, male college graduates.
o Online Behavior – advertising and promotion efforts can be tailored
to each visit to a site by an individual. This strategy is based on
“web cookie” files recorded on the visitor’s disk drive from previous
visits. Cookie files enable a company to track a person’s online
behavior at a website so marketing efforts can be instantly developed
and targeted to that individual at each visit to their website.

Summary:

Marketing Information Systems are good examples to explain the use of


information used in strengthening business functions. The cross functional
linkages of information improve the efficacy of all processes concerned.

7.1 Manufacturing Systems(Computer-Integrated Manufacturing (CIM)):


Computer-based manufacturing information systems use several major
techniques to support computer-integrated manufacturing (CIM).
Uses of computers in manufacturing include
o Computer-aided engineering (CAE)
o Computer-aided design (CAD)
o Computer-aided process planning (CAPP)
o Material requirements planning (MRP)
o Manufacturing resource planning (MRP-II)
o Computer-aided manufacturing (CAM)
Computer-aided manufacturing - (CAM) systems are those that automate the
production process. Some of the benefits of CAM are:
o Increased efficiency through:
 work simplification and automation,
 better production schedule planning
 better balancing of production workloads in production capacity

o Improved utilization of facilities, higher productivity, better quality control


through:
 continuous monitoring
 feedback and control of factory operations, equipment and robots.

o Reduced investments in production inventories and facilities through:


 work simplification
 just-in-time inventory policies
 better planning and control of production
 better planning and control of finished goods requirements

o Improved customer service through:


 reducing out-of-stock situations
 producing high-quality products that better meet customer
requirements

Human Resource Systems:

Traditionally, businesses used computer-based information systems to:


 Produce paychecks and payroll reports
 Maintain personnel records
 Analyze the use of personnel in business operations

Many firms have gone beyond these traditional personnel management functions
and have developed human resource information systems (HRIS) that also
support:
• Recruitment, selection and hiring
• Job placement
• Performance appraisals
• Employee benefit analysis
• Training and development
• Health, safety, and security

HRM and the Internet:


The Internet has become a major force for change in human resource management.
For example, companies are:
 Recruiting for employees through recruitment sections of their corporate
websites.
 Using commercial recruiting services and databases on the World Wide
Web
 Posting messages in selected Internet newsgroups
 Communicating with job applicants by Internet e-mail.

HRM and the Corporate Intranet


Intranet technologies allow companies to process most common HRM
applications over their corporate intranets. For example:
 Intranets allow the HRM department to provide around-the-clock services
to their customers – the employees
 Intranets allow for the dissemination of valuable information faster than
through previous company channels
 Intranets can collect information online from employees for input to their
HRM files
 Intranets enable employees to perform HRM tasks with little intervention
by the HRM department
 Intranets can serve as a superior training tool
 Intranets enable employees to produce automated paychecks, the online
alternative to timecards
Accounting Systems (Online Accounting Systems)

Accounting information systems are being affected by Internet and client/server


technologies. Using the Internet, intranets, extranets, and other network changes
accounting information systems monitor and track business activity. The online,
interactive nature of such networks calls for new forms of transaction documents,
procedures, and controls. Many companies are using or developing network links
to their trading partners through the use of the Internet or other networks for
applications such as order processing inventory control, accounts receivable, and
accounts payable.

Summary:
After studying the role of data and information in various information systems
such as Manufacturing Systems, Accounting Systems and Human Resource
Management Systems one can comprehend how the level of efficiency increases
in various business processes once the computer based information systems are in
place.
Transaction – Any unit event happening in the organization is called a
transaction. A transaction generates data. This data may then form part of the
information generating process which is the basis of all managerial decision
making.

8.1 Transaction Processing Systems (TPS):

Everyday routine business processes or transactions produce voluminous data.


Data is entered every second into the company databases. There may be two
modes of data entry and resultant transaction processing:
• Batch Processing – transaction data are accumulated over a period of time
and processed periodically. Batch processing is the preferred mode when
the business task in process is not critical in nature. This is used when
benefits of real time processing are not in congruence to the communication
costs involved. Processing of fee or attendance records etc may be
examples of such processing.
• Real-Time Processing – data are processed immediately after a transaction
occurs. This is essential for processes which are critical in nature and whose
records must be current and up to date. No time lag should take place
between the time the data is generated and the time it is updated on central
databases. These are also called OLTPS
Transaction Processing Cycle

Fig 8.2 A

The process of transaction processing follows the below mentioned steps:

• The first step is the entry of the details of any business process and
hence the resultant database maintenance which is updating of the
corporate databases of an organization to reflect changes resulting from
day-to-day business transactions.

• The next step is the document and report generation – including


transaction documents, transaction listings and error reports. Reporting
is a very important task of the management process. A report depicts the
status of any task to the complexity and detail specified.

Summary:

TPS are the basic and initial processing systems of a business organization. The
data generated at this preliminary level is used at all ascending levels of
management for control and analysis purposes.

Reports

Some of the types of report generated at lower levels of management may be:

Detailed Reports – These reports contain minute details of transactions and


processes involved. These may be an important source of record keeping of the
operations of the organization and add to the archives of the organization. They
may be further processed, modified or summarized for higher levels of the
organization. These may also contribute data to the data warehouse or data mart
maintained for the organization. Older data and reports may form a part of the
legacy systems of the organization.

Summary Reports – These are those reports which are prepared to give a
comprehensive and holistic picture of the organization. They may be used to
review the systems and ensure that the systems are in control and in consonance
with the targets and standards specified.

Periodic Reports or Scheduled Reports: They are produced on a regular basis,


widely distributed, and often contain large amounts of information. These are
reports which are generated at specified fixed intervals of time regardless of
activity. These may be weekly, monthly, yearly etc.

Non Periodic Reports – They are generated as a function of activity and not time.
They may follow some other methodology of generation such as:

• Push Reports – generated by a member of the organization to highlight


some activity or task of importance.

• Demand Reports – generated on demand to give a picture of the activity or


task specified. These may be made as detailed or as comprehensive as
specified by the relevant authority. Demand Reports fill irregular needs for
information (SQL, QBF)

• Inquiry Processing – making inquiries and receiving responses concerning


the results of transaction processing activities

Summary:

Information Technology has enhanced inter-organization collaboration with its


business partners and intra organization communication within the networked
enterprise. Data driven tasks improve vital business processes as also contributing
to archival systems.
Objective Type Questions

Q1 Several major types of databases may be found in computer-using


organizations. Operational databases are described as databases that store
detailed data needed to support the business processes and operations of the
business enterprise. A transaction processing database is one type of
operational database.
• True
• False

Q2 Transactions are business _____________ that occur as part of doing


business such as sales, purchases, deposits, withdrawals, refunds, and payments.

Q3 Transaction processing systems process data in two basic ways. One way is
real-time processing, where transaction data are processed __________ after a
transaction occurs.

Q4 Online transaction processing systems play a role in electronic commerce


but the major roles are played by the Internet, extranets, and other networks
that tie them electronically to their customers or suppliers for online
transaction processing not the data collected from data systems.
• True
• False

Q5 An information system is a combination of hardware, software, and data


resources that transforms information in an organization.
• True
• False
Q6 There are three fundamental reasons for all business applications of
information technology. They relate to the three vital roles that information
systems can perform for a business enterprise. One of these roles is support of its
business processes and operations.
• True
• False

Q7 In any organization, end users rely on many types of information systems


like:
A) Simple manual (paper-and-pencil) information systems.
B) Formal (written procedures) and informal (word-of-mouth) systems.
C) Computer-based information systems.
D) All of the above.

Q8 Within the context of an information system, which one of the following


would be considered a typical end user?:
A) Managers.
B) Accountants.
C) Customers.
D) All of the above.

Anda mungkin juga menyukai