Business Information Systems

Semester I 2011/12 Saint Mary University College MBA Program Dr. Tesfaye Debela

Discussion: The analogy of Nervous System in Humans and Information Systems In Organisations What makes humans different from other Animals?

Tesfaye Debela

Information System Concepts

this part introduces:
System properties and their application to business organisations Compnents of information system, The relationship of systems and organisations Clearly explain the relationship between organization, management and technology.

Tesfaye Debela

Information as organisational resources

organisational resources: Material, financial, human (Physical resources) and informational resources (conceptual resource). Managers manage the physical resources and the performance of their organisations using the conceptual resource A manager, at any level of the organization, needs information to make decisions and to control organisational resources. Therefore, information resource needs proper management attention as the other resources.
Tesfaye Debela 4

In management of modern organisations, the interest in ICT results from three major perspectives. to days Business organisations are concerned more on effectiveness than on efficiency. Hence, organisations process large volume of external and internal information to cope up with changes in their environment. The growth of computers in processing speed and memory capacity has increased the capacity of organisations in handling and processing large volume of data The development in internet technology has enabled organisations to link their operations and create strategic alliance with customers , suppliers and other stakeholders

Tesfaye Debela

The Concept of Information

Discussion Point: The meanings and relationships of Data, Processing and Information
Data Storage

Input (Data)

Processing (Information Processor)

Output (Information)

Figure 2.1 Simple Information System Model.

Tesfaye Debela

The Concept of Information

1) Data: Are raw facts which are group of symbols that represent quantities, actions, objects, concepts, etc. figures and facts can take different forms such as images, text, or voice. For example: 10km, or Birr100. For processing purposes, data items are organised into data structures, file structures and databases.

Tesfaye Debela

2) Processing: processing is changing data from unusable into usable form Figure 1.1 shows data is stored and later processed to obtain information for decision purpose. For example, a personnel section stores the data of employees in personal files so that he can use it in the future either for promotion, termination or any other purpose.

3) Information: is defined as a valuable processed data that is meaningful to the user to make organisational decisions, to take actions or to fulfill any legal obligations. data is related to recording historical or current facts, but information affects our current or future actions.
Tesfaye Debela 8

Value of Information from the perspective of a manager:

Time dimension
Timeliness: availability at the time of need, the right information at the right time Currency: information should be up-to-date, Frequency: and should be provided as often as needed

Content dimension:
Accuracy: Ideally all information should be accurate or free of errors or bias. Relationship between accuracy and cost. Accounting information need 100% accuracy. Long range economic forecasts, statistical reports can be accepted when the data contains a few errors Relevancy- Information should pertain to the problem at hand or to a specific situation.

Tesfaye Debela

Value of Information from the perspective of a manager

Content dimension
Conciseness: Information should be concise and to the point as much as possible. Completeness: Information that presents a complete picture of a problem or a solution. Information overload results from too much information. Scope

Form dimension:
Clarity Detail Presentation Media

Tesfaye Debela

10

Exercise 1 1. True or False, Why?

a. All unprocessed data are not information.

b. All processed data are information. 3. Differentiate the following three activities: Accounting transactions recorded hourly, daily, weekly or monthly in different accounts. Annual financial reports produced by the accounting section The variation between the actual performance and budgeted performance. 4. State the data and information of deploying human resource on certain project.
Tesfaye Debela 11

Discussion Points
How do you understand (define) a system? Examples of systems What is the difference between organisation and systems?

Tesfaye Debela

12

Systems Concepts
A system is defined as a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organised transformation process natural systems, deal with natural relationship including living systems and non-living system. artificial systems, man-made systems such as organisations, computer systems, factory systems, etc. Abstract systems: systems of ideas, beliefs, theories, etc.
Tesfaye Debela 13

Types of Systems
Closed vs Open Systems
closed system: a system that cannot interact with its environment. In organisations and information processing there are relatively closed systems, which are having wellcontrolled inputs and outputs. Examples: Factories, computer systems Open Systems: a system that interacts with other systems in its environment. Interactions between open systems take place through exchange of information, material, personnel, finance and energy. All business organisations are open systems.

Tesfaye Debela

14

Types of systems continued

Deterministic vs. Stochastic Systems
Deterministic systems: if the behaviour of a system is predictable in detail e.g. solar system Stochastic systems: systems difficult to predict their behaviours. Behaviours can be affected by random or stochastic inputs. Systems that involve people.

Tesfaye Debela

15

Characteristics of open systems

Environment; No system is seen outside the context of its environment Subsystem: Any system has lower level systems, called subsystems that perform different functions supra-system: a system can be a subsystem of a higher level systems boundary can be purpose, scope objective, mission, etc, that serves as boundary to separate a system from its environment and other systems interface: occur at the boundary in the form of taking inputs from, and delivering outputs to, the environment . Input a system needs raw materials, labour, energy, information etc. as input.
Process: a series or parallel activities taken by a system/or subsystems to combine different inputs and to produce new product /service.
Tesfaye Debela 16

Characteristics of open systems

Output: A product of a system that can be input to other systems or consumed as end product. Synergy: Tells unity of purpose, coordination of activities, etc which give higher value product than the value of the inputs. Equifinality: there are a lot of alternatives that can lead to the same end result or objective. Coupling: the extent of linkage between the subsystems.
Loose coupling means that subsystems are not closely linked and close coupling means that systems are highly dependent on each other.

Feedback and control: to monitor the internal and external situation and to take action based on the result
entropy vs equilibrium.

Tesfaye Debela

17

Feedback and Control

Three conditions are needed to exercise control over the behaviour of the system
A target, objective or goal for the system to reach A system capable of reaching the target or goal (system capacity) Some means to influence the behaviour of the system (control inputs: (decisions, decision rules or procedures)

Steps of Feedback and Control

Sensing the feedback Measuring the intensity and the direction of the feedback Comparing with established standards

Taking actions (ex. reversing the entropy or Bringing the systems performance into equilibrium)
Tesfaye Debela 18

Feedback control vs self-regulation

Feedback Control: when a system receives an extra input of decision rules supplied by human controller (reactive control)
Positive feedback : Information related to Increases in the discrepancy between the future state and the reference state
Ex. Rapid sales growth leading to increased production. May cause cash shortage.

Negative feed back: Information related to decreases in the discrepancy between the future state and the reference state
Ex: the effort of the system to look for sources of financing the shortage as a result of sales growth

Self regulations: the rules governing the system are internal, which are the result of natural evolution. Mostly, features of biological or ecological system based on the rule of negative feedback. Feed-forward control: predicting how changes in uncontrollable inputs are likely to affect systems behaviour on the desired course, thereby counteracting the effects of input disturbances. (Proactive control)
Tesfaye Debela 19

The General Systems Model

Physical Systems transforms input resources such as personnel, capital, raw materials/components, equipment and information into products and services A conceptual system is a system that uses conceptual resources information & data to produce conceptual outputs such as decisions and instructions
Open loop systems Closed loop systems

The physical and conceptual system together form the general systems model of a business organisation.

Tesfaye Debela

20

The General Systems Model of Business

Environment
Management (conceptual) System

Objective

Decision Environment

Management (Control Mechanism)

Decision Data

Information

Decision Data
Physical System

Information System Data

Data/Inforation

Physical Input

Transformation Process

Physical Output

Environment

Tesfaye Debela

Environment
21

Information System and BIS

Information system is defined as a set of people, procedure, and resources that collects, transforms and disseminates information in an organisation. Computer Based Information Systems (CBIS): Information systems that rely on computer hardware and software for processing and dissemination of information. Business Information System: a group of interrelated components that work together to capture, store, process, and control of data resources to produce information as output that support planning, decision making and operational activities in an organisation (Bocij, Greasley and Hickie; 2008)
Tesfaye Debela 22

Discussion points
Take the Registrar Office of Saint Mary University College
What are the elements `(Resources) of IS? What are the inputs, processing, output, storage and control activities of IS Break the system into main sub processes

Tesfaye Debela

23

Information System Resources

Hardware resources physical devices and materials used in information processing. Computers and calculators, sheets of paper, magnetic disks., filing cabinets and paper trays. Software resources all sets of information processing instructions. Ex. Programs, which are the sets of operating instruction that direct & control computer hardware; procedures: the sets of information processing instruction needed by people. Manuals, Instructions how to fill a certain application form or a material requisition form.
Tesfaye Debela 24

 People resources include specialists (people who develop and operate information systems) (Ex.) system analysts, programmers, computer operators; and end users; accountants, salespersons, engineers, clerks, customers or managers or all who use an information system or the product of information system. Data Resources data & information constitute valuable organisational resources. For example: suppliers name, the sales transaction (on account/on cash), customers name, total sales, total expenditures, etc., are data resources.
Tesfaye Debela 25

System Analysis
System Analysis: studying the information problems and information needs of an organization and to determine how people, organizational procedures data and information technology are optimally integrated to accomplish the organizations objective. The major activities of system analysis:
breaking a large system into different components of information processing activities, Grouping activities into Critical, essential and redundant determining the interface between people and information technology (ergonomics). Designing an information system that support organizational operation and management

Tesfaye Debela

26

Assignment
Case Study: Group Work UPS Competes globally with information Technology page 17 (2006 edition) Individual Assignment: Discuss the systems characteristics of the organisation in which you work by relating it to its Supply Chain Management.

Tesfaye Debela

27