Introduction to Information Systems
Instructional
Objectives
You
will be able to:
• Distinguish data from
information
• Describe the
characteristics used to evaluate the quality of information
• Identify system
concepts
• Differentiate various
types of systems
• Name the components of an information system
• Briefly explain the
activities of an IS
• Recognize the
components of a computer based information system
• List out the basic
types of business information systems
• Identify the role of
IS in business and the management challenges
• Describe the
importance of studying information systems
Overview:
Information
Systems exist in our environment with or without our knowledge. Sometimes, we
do not recognize a particular thing as an information system and they appear as
a good or service in the neighborhood. For example, a bus timetable or train timetable
which you must know if you are planning to use the public transport service to
travel regularly or occasionally. These timetables provide information which is
very useful to a particular local community and they are some form of output of
a particular system maintained in a bus or railway company. It is important to
mention that computers are not essential to produce these outputs (i.e.
bus/train timetables) or maintain such a system (i.e. a transport system) in an
organization. However, if computers are used in a system, they will definitely
add value to the system.
Question: How computers could add a big value to a system maintained
by a transport company?
Answer: One example would be time taken to produce a report which
presents the schedule and actual transport offered by the company during a
particular period of a day.
The
management may want to see this report several times a day but may not be possible
if the company maintains a manual way of recording their services and producing
an output.
In
fact, it will be hard to get a daily report in the early morning when the
company starts the business. A clerk who works in this transport company, may
request another half a day to produce the report by analyzing records of
previous day.
In
the module of Information Systems and Technologies, we will study details of
Information Systems and how information technology is used to make these
information systems an effective to tool for all those people who are
interested in it.
NOTE: Those
who are interested in an information system are Identified as stakeholders of
an information system.
In
this section, we will learn the basic components of information systems, types
of available information systems, the role of information systems in business,
the managerial challenges and the importance of studying about information
systems.
1 Introduction to
Information Systems
1 Information Concepts
In
this sub-section, we will discuss basic concepts behind the process of
converting data into information. it is data which will be converted to
information by carrying out several activities to make them useful in the
decision making. However, very often the meaning of these two terms causes
confusion.
1.1 Data vs. Information
1.1.1 What is Data?
It
is a set of facts which describes a particular thing in the real world. It may
represent a single value or multiple values. For example, marks of a particular
subject of a student in a class represent a single value data. At the same
time, such a mark may exist with marks of other students who took that subject.
In order to add the value for these marks, it may be necessary to access data
of other facts such as students’ name, index number and year of examination
etc.
More
examples of Data in different contexts:
• In a company: employee’s name, number of hours worked in a
week, inventory part numbers, sales orders
• In environment: Rainfall data, temperature data,
1.1.2 What is Information?
Sometimes
it is difficult to distinguish data and information. Information is a kind of
data which will be very useful for decision making in different contexts.
Simply, it has more value than data to understand a particular context.
For
example, a teacher may want to know how many students have obtained marks above
50 in a particular subject. He/she may also want to know the student who
obtained the highest mark in the classroom. In such a situation, the teacher
has to analyze data about student marks together with their identification
numbers.
More
examples of Information in different contexts:
In
a company: monthly salary of an individual in the salary slip, total sales in a
particular month of the company, etc.
In
environment: Monthly report of rainfall, temperature analysis report of each
part of the country during a particular year.
In
personal life: Total expenses in a particular month,
1.1.3 Process of converting from data to
information
Data
can be converted into information by carrying out some series of activities on
data.
These
activities involve some mathematical operations and/or tabulation operation.
Process describes this series of activities.
Information
can be considered as an artifact in a particular context similar to other artifacts.
These
artifacts are useful to carry out some other activities in. For example
(E.g. A), furniture is built using wood as raw material. The wood is produced
using timber in trees. Interestingly, timber cannot be directly used to produce
furniture and it must be converted to intermediate state called wood. This
process requires specific knowledge which describes rules, guidelines and
procedures.
Knowledge for the Process:
According to example mentioned above (E.g. A), rules and
procedures define knowledge required for the process. Knowledge is the body of
rules, guidelines and procedures used to select, organize and manipulate data
to make it suitable for a specific task.
Before selecting some data to be processed, they could be examined
to find out their relevance or validity. Such examination is a prefix of the
process. In order to improve the value of information, the output of processed
data will be organized with respect to some relationship to improve its value.
1.1.4 Types of Data and Information:
Data and information can be categorized based on their
representation for the human processing. Following table summarizes the four
main types of data together with examples.
1.2 The characteristics of Valuable Information
The value of information depends on their usefulness in the
decision making process. This value can be judged based on a set of features
that can be identified in the information.
Accurate: Accurate
information is error free. Errors could be occurred due to different reasons.
If there is some problem in the knowledge required for the process, output (information)
may have errors. At the same time, if input (data) contains some errors, the
output will not be accurate. This is known as garbage in garbage out (GIGO).
Inaccurate information is not error free.
Complete: Complete
information contains all the important facts to make clear decisions.
For
example, an investment report may present all possible benefits and profits without
details of cost that will be required.
Economical: Information
should also be relatively economical. Decision makers must always balance the
value of information with the cost of producing it. For example, if collecting
the data takes lots of resources and time, it is not economical.
Flexible: Flexible
information can be used for a variety of purposes. For example, Information
on
how much inventory is on hand for a particular part can be for
- a
sales representative to determine the sales plan
- a
production manager to identify possible constraints for the production
- a
financial executive to calculate the current assets figures of inventory
Reliable: Reliability
of information describes the correctness of the information. If there are any
problems with respect to correctness of data, it will definitely affect the reliability
of information. For example, if the reliability of data collection method is poor,
it will directly affect the information that will be produced.
For
example, prediction of prices based on rumors (not past variance information),
is
not reliable.
Relevant: The
relevance of information is determined based on the usefulness of information with
respect to the decision making process. For example (E.g.A),, a drop in timber prices
cannot be used to predict the price fluctuation in computers.
Simple: Simplicity
in the representation of information is also a very useful feature utilized to improve
the usability of information in the decision making process. Too many information
could affect the simplicity in the presentation. Therefore it is better to provide
interactive customization to determine simplicity. Providing too many information
is known as information overloading.
Timeliness: Decisions
should be made at the right time to achieve effectiveness. Timely information
refers to providing information at the right time. For example, if you can get
to know today’s weather forecast before you leave home, you can decide whether
to bring an umbrella or not.
Verifiable: If
it is possible to confirm the reliability of the information about its
correctness (validate), it becomes verifiable Information. If you are not sure
about a particular information (say foreign news) heard from a radio channel,
you can search about it using Internet.
Accessible: Accurate information plays a major roll in the decision making
process of any organization. Therefore it is essential to be able to access the
Correct/ relevant information by authorized personnel at the right time to meet
their needs.
Secure: the value of information could be lost due to issues such as
unauthorized user access or intentionally damaging its existence. Therefore, it
is important to make steps to protect valuable data and information. For
example, use of passwords to protect data and information.
It is important to note that the values of these quality
attributes may vary from one piece of information to another. It affects their
usefulness in the decision making process. For example, at the Stock Exchange,
information about market forecast may not be very accurate but if the
timeliness is poor, the total value of information will be very poor.
1.3 The Value of Information
1.3.1
Value of information
The value of information is calculated with respect to its usage
in decision making and return on benefits due to the decision taken. Therefore,
the cost of information has to be deducted from the benefits in order to
calculate the value of information.
For example, someone wants to invest in stock market but he/she is
not familiar with the business procedure, he can then recruit an assistant to
evaluate stock market conditions to determine an investment plan. This
assistant will have to gather stock market information and generate reports to
according his clients requirements. However, if the return of investment is not
significant with respect to cost incurred to produce the investment plan, it is
worthless to recruit an assistant for this activity. In other words, the value
of investment plan is very low.
2 System and modeling concepts
2.1 What is a system?
A system is a collection of components which work together to
achieve a specific goal.
These components are connected to maintain communication when they
work together .
However, they have independent functionalities. Therefore, each
component is another system, named as a subsystem, which carries out tasks to
achieve some objectives of the original system.
Example 1: The Human Body
Our human body is a complex system which contains several
components which acts as subsystems. The human body consists of complex muscle,
bone, respiratory, digestive and circulatory subsystems, each providing a
specific task of the overall system.
Let’s consider one such subsystem, respiratory which provides
oxygen to human body. Some\ components of the respiratory subsystem such as
nasal passages, lungs etc. can be considered as a subsystem. On other hand,
respiratory system communicates with digestive system as two independent
components of human body.
Example
2: A School
A particular school can be considered as a component of education
system in this country
(a university may be another one). At the same time, a school
itself is a complete system that includes a principal, teachers, equipment and
classrooms which are its components.
Viewing complex systems as a collection of subsystems may help us
handle complexity and improve our understanding of the system.
2.2 System components and concepts
In abstract terms, a system consists of three main components and
few communication links.
They
are Input, Process and Output. Feedback is one communication link.
 |
| A school (viewed as a system) illustrating the system boundary |
A school (viewed as a
system) illustrating the system boundary
Input:
dirty car, water, cleaning ingredients, time, energy, skill, knowledge
Processing
mechanism: select the cleaning options: wash only/wash with wax/ wash with wax/
and hand dry
Feedback:
your assessment of how clean the car is
Output:
clean car
System types:
Considering
various features, we can classify systems into different categories as follows:
• Simple or complex
• open or closed
• stable or dynamic
• adaptive or non-adaptive
• permanent or temporary
System
Type
|
Characteristics
|
|
Simple
vs.
Complex
|
Simple
Has few components, and their
relationship or interaction
between elements is
uncomplicated and
straightforward.
Example: A
“well” is a simple
system that provides water.
|
Complex
Has many elements that are highly
related and interconnected.
Example: A
water management
and distribution facility of a country
which contains many elements such
as dams, water tanks, distribution
centers etc., is a complex system.
|
Open
vs.
Closed
|
Open
Interacts with its
environment.
Example: The human
body is an open
system. The human
body interacts
with the environment
through the 5
senses.(eyes, ears,
nose, tongue and
skin)
|
Closed
Has no Interaction
with the
environment.
Example:We can
consider the process
of marking
examination scripts as a
closed system. The
department of
examination along
with many marking
panels gets together
and evaluates the
students' scripts.
This system has no
interaction
with the environment
|
Stable
vs.
Dynamic
|
Stable
Undergoes very little change over
time.
Example: The
Judiciary System of
a country can be classified as a
stable system. The Judiciary
System consists of courts, judges,
laws, a judiciary process, etc.
which does not change rapidly
over time.
|
Dynamic
Undergoes rapid and constant
change over time.
Example: We
can consider the
human body as a dynamic system.
The human body undergoes rapid
and constant change (e.g. heart
rate, blood pressure etc.)
|
Adaptive
vs.
Non-adaptive
|
Adaptive
Is able to change in response to
changes in the environment.
Example: We
can classify the
human body as an adaptive
system as the human body is able
to change in response to changes
in the environment. For example, when we feel hot, the body
sweats and cools us.
|
Non-adaptive
Is not able to change in response to
changes in the environment.
Example: We
can consider a
building as a non-adaptive system.
The building is inanimate entity and
does not respond to changes in the
environment.
|
Permanent
vs.
Temporary
|
Permanent
Exists for a relatively long period of
time.
Example: We
can consider a
“Hospital” as a permanent system
as it exists for a long period of time
|
Temporary
Exists only for a relatively short period
of time.
Example: We
can consider the
manufacturing of lanterns for Wesak
as a temporary system. The lanterns
are constructed and sold by a
company/group of people during
the months of April and May which is
relatively a short period of time
when compared to a factory that
produces goods throughout the
year.
|
2.3 System performance and standards
Whether a system works properly, can be identified by evaluating
its performance. System performance can be measured in various ways. Two
important indicators in the system performance are efficiency and
effectiveness.
Efficiency: measure of what is produced divided by consumed (output/input)
It may range from 0 to 100 percent
Example: The efficiency of a motor is the energy produced (in terms of work
done) divided by the energy consumed (in terms of electricity or fuel). Some
motors have an efficiency of 50 percent or less because of the energy lost to
friction and heat generation.
Efficiency is a relative term used to compare
systems.
Example: a gasoline engine is more efficient than a steam engine because,
for the equivalent amount of energy input (gas or coal), the gasoline engine
produces more energy output.
Effectiveness: extent to which system attains its goals or objectives. It can be
computed by dividing the goals/objectives actually achieved by the total of the
stated or expected goals/objectives of the system.
Example: A company may have a objective to reduce damaged parts by 100
units. A new control system may be installed to help achieve this objective.
Actual reduction in damaged parts, however, is only 85 units. The effectiveness
of the control system is 85 percent (85/100 = 85%).
Effectiveness, like efficiency, is a relative
term used to compare systems.
System performance standard: A specific objective of the system.
The system performance standard is defined considering both
effectiveness and efficiency of the system since the goal of a system is
usually defined considering both these factors. The status of the system
(whether it is good or bad) is then described with respect to this standard.
Example: A system performance standard for a particular marketing campaign
might be to have each sales representative sell $100,000 of a certain type of
product each year
A system performance standard for a certain manufacturing process
might be to have no more than 1 percent defective parts:
• Once standards are established, system
performance is measured and compared with the standard. Variances from the
standard are determinants of system performance.
2.4 System variables and Parameters
Some parts of a system are under direct management control, while
others are not. This is measured with respect to values in the system variable
and parameters.
System variable - item controlled by decision-maker
Example: The price a company charges for its product is a system variable because
it can be controlled.
System parameter - value that cannot be controlled
Example: the cost of a raw material.
The number of pounds of a chemical that must be added to produce a
certain type of plastic is a quantity or value that is not controlled by management;
it is controlled by the laws of chemistry.
2.5 Modeling a System
Many things in the real world are complex and dynamic and hard to
understand. In such cases, we use a mechanism called modeling to simplify
presentation of such things. It is then easier to understand, to test their
effects and different relationships.
A model can be described as an abstraction or approximation that
is used to represent reality. Good models enable us to explore and gain
improved understanding of real-world situations. This is not a new technique.
Even ancient people had used diagrams as models to present things.
Examples of models:
A written description of a battle
A physical mock-up of an ancient building
The use of symbols to represent money, numbers
Mathematical relationships
Today, scientists, engineers, managers and other professionals use
different models to understand complex problems and to present different
solutions. In the context of organizations, managers and decision makers use
models to help them understand what is happening in their organizations and
make better decisions.
In general, models can be classified into various types as narrative,
physical, schematic and mathematical.
Narrative
Model:
A narrative model is based on words, spoken or written.
Both verbal and written descriptions of reality are considered
narrative models.
In an organization, reports, documents and conversations
concerning a system are all important narratives
Computers can be used to develop narrative models.
Example: word processing
Physical Model:
A physical model is a tangible representation of reality.
Many physical models are computer designed or constructed.
Schematic Model:
A schematic model is a graphical representation of reality.
Graphs, charts, figures, diagrams, illustrations, and pictures are
all types of schematic models.
Schematic models are used extensively in developing computer
programs and systems.
Mathematical Model:
A mathematical model is an arithmetic representation of reality.
Computers excel at solving mathematical models.
Examples:
Retail chains have developed mathematical models to identify all
the activities, effort, and time associated with planning, building, and
opening a new store so that they can forecast how long it will take to complete
a store.
A mathematical model developed to determine the total cost of a
project.
TC = (V)(X) + FC where
TC = total cost
V = variable cost per unit
X = number of units produced
FC = fixed cost
When a model is developed, it is important to maintain its
accuracy to use the model effectively for problem solving. Otherwise the
solutions obtained through the model may not be valid. Models are usually based
on assumptions and if they are not realistic assumptions, it leads to
inaccuracy. Therefore, the potential users should clearly understand these assumptions.
3 Information Systems
3.1 What is an Information System
An information system (IS) is a set of interrelated elements or
components that collect (input), manipulate (process) and store, and
disseminate (output) data and information and provide a feedback mechanism to
meet an objective. Hence Information system consists of four main components,
namely input, processing, output and feedback. Their relationship is illustrated
in the figure below.
This feedback mechanism is very important since it provides to
improve the quality of processing as well as the input. Every system including
Information system, has a goal to be achieved to fulfill the need of the
organization. As a result of this mechanism, organizations can achieve their
goals, such as increasing profits or improving customer service.
3.2 Main Components of an Information System
In this section, we will discuss details of main
components of Information system described in section 3.1.
Input
Input describes activities to produce raw materials which will
enter into a system from the environment. In information systems, it includes
activities of gathering and capturing raw data that should be processed.
Input to a system could take a manual or automated method. For
example, a scanner at a grocery store that reads bar codes and enters the
grocery item and price into a computerized cash register is a type of automated
input. Generally, both automated and manual methods of input are active. When
the bar code reader fails to identify the item, cashier can enter the code
using the keyboard. Regardless of the input method, accurate input is critical
to achieving the desired output.
Processing
In information systems, processing part involves converting or
transforming input data into useful outputs by making calculations, comparisons
and arranging raw data. Sometimes, processing involves storing data for future
use. This is a critical part in an information system, and it can be done
manually or with the assistance of a computer.
Output
In information systems, output involves producing documents and
reports using results of the processing activity. For example, pay slip of each
employee prepared based on the
company format, reports of total pay to the management, reports to
third parties such as Labor Department (EMF contribution), Inland Revenue
Department (Income tax employees).
In some cases, the output of a system could become an input to
another system. Often, output from one system can be used as input to control
other systems or devices.
The salesperson, customer, and furniture designer can go through several
design iterations to meet the customer’s needs. Special computer programs and
equipment create the original design and allow the designer to rapidly revise
it. Once the last design mock-up is approved the computer creates a bill of
materials that goes to manufacture to produce the order.
Output can be produced in different ways using different devices
such as display screens, printers etc. It can also be a manual process
involving handwritten reports and documents.
Feedback
In information systems, feedback is a kind of output that is used
to make changes to input or processing activities. For example, errors or
problems might make it necessary to correct input data or changes to the logic
of the process.
Feedback is also very important component for managers and
decision makers.
3.3 Computer based Information Systems
3.3.1 A
computer-based information system (CBIS) is a single set of
hardware, software, databases, telecommunications, people, and procedures that
are configured to collect, manipulate, store, and process data into
information.
All these components of CBIS define the business’s technology
infrastructure since it forms the foundation of organizations information
systems. Lets identify these components in detail.
3.3.2 Hardware
Computer equipment used to perform input processing and output
activities.
Hardware components can also categorize based on the input,
processing and output activities. Other than main computer system unit, all
other hardware devices are known as peripherals.
• Input devices
Input devices are used to input data that will be processed by the
Information System. They are connected to computers directly to pass data. Most
common input devices are keyboard and mouse.
Here is the list of common input devices:
The keyboard The mouse.
Other pointing devices,
Scanning devices,
Magnetic ink character readers,
Smart cards
Optical cards, Sensors, Digital cameras etc.
• Processing devices
Processing devices include the central processing unit (CPU) and
main memory. They are inside the system unit. Lets identify CPU and main
memory:
CPU
This
has several components and the processor is most important component. It is
generally considered as the “brain of a computer”. It does exactly what the
name implies, process data based on the given instructions. As a result of this
processing, input data will be changed. Speed is the most important parameter
in a processor and it is very important for the faster processing of complex
data like video images.
Simply,
if the speed is low, the computer will be slow.
The
Main/Primary Memory
Also
know ans the Primary memory is directly accessible by the processing unit of
the computer. You can store and retrieve data much faster with primary memory
compared to secondary memory.
We
will discuss about the processor and the primary memory in detail in Chapter 3.
• Output devices
Results
after processing the data, can be stored in the computer or it can be taken out
from the information system. Results are known as output and devices which
facilitates distributing of the output is known as output devices.
Depending
on the requirements of the organization output may be produced on printed paper,
visual screen or any other format (non-permanent ways, e.g. a file of data).
Output
Type Output Device
Printed
on a paper Printers, plotters
Visual
Display Monitor
Audio Speakers
Video Monitor + speakers
Software
Object Secondary storage devices,
-Floppy
Disk, Flash disks
3.3.3 Software
Software
consists of computer programs that govern the operation of the computer. It can
be described as the digital instruction set to a computer. CPU needs software
to control its functions as well as to process the input data. Without software
computers are dead hardware. It is the component which gives the computer the
power to act as an intelligent machine.
Software
is normally classified into two components called application software and
system software.
Example:
MS Windows is a system software which control devices including the CPU. MS
Word
is an application software which facilitates users to use computers as word
processors.
Application Software
An
Application Software also is known as an application package, is a set
of programs designed to carry out operations for a specified purpose or task.
Example:
Microsoft
Office (MS Office). It consists of several applications which usually are very useful
to carry out activities in an office environment.
An
Accounting Package
It
may help an account division to carry out all its activities including payroll
of employees in the organization.
System Software
It
generally performs tasks of controlling devices attached to a computer system.
It gives life to hardware devices. Simply, hardware devices together with
system software provide the infrastructure to run/execute application software.
Simply, Application software cannot be run without having system software.
Some
software communicates with hardware devices to coordinate activities. E.g.
print drivers. You have to install these drivers to connect to a computer.
System
Software allows application software to be run on the computer with less time
and effort. Most important system software of a computer is its operating
system. A computer cannot work without an operating system. It controls all
hardware devices and other system software, plus facilitation to run a
particular application software.
Example: Microsoft
windows, Linux, Unix
3.3.4 Databases
A
database is an organized collection of data and information in an organization.
Data
and information are critical for problem solving and decision-making in an organization.
Hence, most managers and executives consider a database to be the most valuable
and important part of a computer-based information system.
We
use special application software to create databases. We call these software as
“Database Management Systems” DBMS.
Examples: Access,
DBASE.
3.3.5 Telecommunications, Network and Internet:
Communication
is described as transmission (i.e. both sending and receiving)of messages between
two parties. We can use electronic medium to this activity. For example, using
a telephone we can communicate with someone far away.
Telecommunications
is described as the electronic transmission of signals (i.e. data, voice, messages)
for communications.
Telecommunications
enable organizations to connect with their branches, customers and other
parties to set up advanced business environment. For example, you can use a telephone
to book a cab service.
What
is the Internet?
The
Internet is defined as a network of networks.
The first
letter of Internet, I, is always capital letter. It is huge resource and no one
owns it as a
Do
you know what a network is?
A computer network is a group of computers that are
connected to each other for the purpose of communication.. Some computers in this network act like leaders and we call
them servers. Other computers are called clients.
When
the geographical area of the network is not very large, we call them as LAN
(Local Area Network). On the other hand, WAN (Wide Area Network) is a network
which is spread in a large geographical area, sometimes connecting several
offices/branches of an organization.
By
connecting computers to each other, we can communicate with one another and
share resources of computers (e.g. data files, programs, physical devices like
printers)
Today,
Information Systems heavily depend on all these telecommunication, network and Internet
infrastructures. Due to the developments in telecommunications, organizations
have access to wide variety of services irrespective of location and time.
3.3.6 People
Computer
based Information systems (CBIS) are designed and developed by a group of people
to another set of people who will use it to do some tasks. Therefore, the role
of people is very significant. We can identify four types of groups who are
considered the key stakeholders of a CBIS.
They
are:
- End
Users – people who use an information system or the information produced by a
CBIS. Most end users consist of knowledge workers, a term that is used to describe
a group of people who spend most of their time communicating and collaborating
in teams and workgroups. They create, use and distribute information.
(e.g.
employees in an organization, customers).
- Clients
– who are spending money to develop a CBIS for an organization
(e.g.
managers of the organization)
- Developers
– who will design and develop CBIS according to requirements of an organization
(e.g.
software engineers/developers in IT department or software house/company)
- Development
Managers – those who are undertaking the contract to develop
CBIS
and manage the development work using developers
(e.g.
managers in IT dept. of an organization or managers of software house/company)
3.3.7 Procedures
Development
of a CBIS is not an easy thing. We need to use an engineering approach to develop
such a thing. (e.g. it is like building a big building or bridge, only
difference is we cannot physically see it like a bridge)
After
developing a CBIS, it must be used according to some procedures to utilize it
to achieve your objective. Once you have a car, you must know how to drive it
as well as basic procedures to maintain it.
Information systems are like that. These procedures include the strategies,
policies, methods, and rules for using a Computer-based information system.
Methods describe the steps to be followed to perform a certain
task. E.g. When you want to take a print out of your transactions in your
savings account from the banking Information
System, you must know the method to do it. At the same time, you
must have authority to do so, as others may not be allowed to see details in
your savings account except bank staff.
Procedures may include policies of the organization. For example,
a policy may describe which groups of users have access to a certain database.
3.4 Activities of an Information System
Basic information processing activities that take place in an
information system include input of data resources, processing of data into
information, output of information products, storage of data resources and
control of system performances.
3.4.1 Input of Data Resources
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 users
typically enter data directly into a computer system, or record data about
transactions on some type of physical medium such as a paper form. 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 processing takes place.
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, sales persons can capture sales data using the
computer keyboard or optical scanning devices (ie. input devices).
Methods such as optical scanning and displays of menus, prompts,
and fill-in the-blanks formats make it convenient for the end user to enter
data correctly into an information system. Therefore, these methods also
increase the efficiency of the input activity.
3.4.2 Processing of Data into Information
Data are 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 information system must
also be maintained by a continual process of correcting and updating
activities.
Example. Data received about a purchase can be(1) added to a
running total of sales results, (2) sorted in numerical order based on product
identification numbers, (3) classified into product categories (such as food
and nonfood items), (4) summarized to provide a sales
manager with information about various product categories, and,
finally, (5) used to update sales records.
.4.3 Output of Information Products
The goal of information systems is the production of appropriate
information products for end users. Information products in various forms is
transmitted to end users and made available to them in the output activity.
Common information products include messages, reports, forms, and graphic
images which may be provided by video displays, audio responses, paper
products, and multimedia depending on the requirement of the end user of the
system. We routinely use the information provided by these products as we work
in organizations and live in society.
For example, in order to check the performance of a Sales
Executive, a Sales Manager may print a sales report, accept a computer-produced
voice message by telephone, and view a video display of an executive carrying
out a sales presentation.
3.4.4 Storage of Data Resources
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 are commonly organized into a variety of data elements and databases.
This facilitates its later use in processing or its retrieval as output when
needed by users of a system.
3.4.5 Control of System Performance
An important information system activity is the control of system
performance. An information system should produce feedback about its input,
processing, output, and storage activities. This feedback must be monitored and
evaluated to determine if 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 in a sales report which
lists monthly and yearly
sales of the organization up to two years, the total monthly sales
of year one does not add up to the total sales of the same year.
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.
3.5 Trends in Business Information Systems
Until the 1960s the most information systems played a minor role
carrying out simple transactions processing, record keeping, accounting and
other data processing activities.
Transaction Processing Systems (TPS) are necessary for data
processing activities that result from business transactions. For example, to
register customer orders, to produce payroll checks and produce invoices.
Then another role was added as the concept of Management
Information Systems (MIS).
MIS provide reports and displays for specific time periods. These
reports are designed for managers responsible for specific functions or processes
in a firm. These reports enable managers to control their area of
responsibility. MIS typically provide with standard reports generated daily
with data and information from the TPS.
By
the 1970s, it was evident that the pre-specified information products produced
by such management information systems were not adequately meeting many of the
decision making needs of management. So the concept of Decision Support Systems
(DSS) was born.
A
DSS goes beyond the traditional MIS and provide support for non-routine
decisions or
problems.
It analyses the information already captured by TPSs and MISs in order to
support unstructured and semi structured decision making at various levels.
Such a system can help you budget for your sales team over the next quarter,
considering the current sales forecast.
In
the 1980s, several new roles for information systems appeared.
Firstly,
the rapid development of micro computer processing power, application software packages,
and telecommunication networks gave birth to the phenomenon End User Computing.
They are CBIS that directly support both the operational and managerial applications
of end users.
Secondly,
it became evident that most top corporate executives did not directly use
either the reports of management IS or analytical capabilities of DSS.
Therefore, the concept of
Executive
Information Systems (EIS) was developed. EIS provides support for the long term
strategic view that senior executives need to take of the business. These
systems provide easy access to summarized company data, taking into
consideration the external information such as competitor, industry and economy
at large.
Thirdly,
another breakthrough occurred in the development and application of artificial intelligence
(AI) techniques to business information systems. AI’s are based on artificial intelligence
and carries out functions normally associated with human intelligence, for example,
reasoning, inference learning and problem solving. Robotics is an area of
artificial
intelligence
in which machines take over complex, dangerous, routine or boring tasks, such as
welding car frames or assembling computer systems and components.
Furthermore,
Expert systems (ES) and other knowledge based systems form a new role for information
systems. ES provide expert advice and act as expert consultants to users.
Examples
include credit application advisor and diagnostic maintenance system.
An
important new role of information systems appeared in the 1980s and continued
through the 1990s. This is the concept of a strategic role for information
systems, sometimes called as Strategic Information Systems (SIS). SIS are
Information systems that provide a firm with competitive products and services
that give it a strategic advantage over its competitors in the market place. Also,
IS promotes business innovation, improve business processes and build strategic
information resources for a firm.
Finally,
the rapid growth of the Internet in the 1990s and other interconnected global networks,
changed the capabilities of information systems in business at the beginning of
21st
century. Internet based e-commerce and mobile commerce systems are becoming common
place in the operations and management of today’s business enterprise.
Ecommerce involves any business transaction executed electronically between
parties such as companies (business to business, B2B), consumers and other
consumers (consumer to consumer), companies and consumer(B2C), business and the
public sector and consumers and the public sector.
Although
e-commerce is mostly associated with web shopping, major volume of ecommerce and
its fastest growing segment is business to business (B2B) transactions that make
purchasing easier for companies.
The trends discussed above are depicted in figure.
4 .The
Role of IS in Business and Managerial Challenges
4.1 The Fundamental Roles of IS in Business
There are three fundamental reasons for all business applications
of information technology.
They are found in the three vital roles that information systems
can perform for a business enterprise.
• Support its business processes and operations.
• Support decision making by its employees and its
managers
•
Support its strategies for
competitive advantage
 |
| illustrates three major roles of business applications of information systems |
Support
Business Processes: most retail stores now use computer based information
systems to help them record customer purchases, keep track of the inventory,
buy new merchandise, pay employees and evaluate sales trends.
Support
Decision making: CBIS allow management to make decisions on what lines of merchandise
is required or should be discounted and which areas need investments.
Support
Competitive Advantage: Gaining a strategic advantage over competitors requires innovative
use of IT.
For
example, store management might make a decision to install touch-screen kiosks
in all of their stores, with links to their e-commerce website for online
shopping. This might attract new customers and build customer loyalty because
of the ease of shopping and buying merchandise provided by such information
systems. Therefore, strategic information systems can help provide products and
services that give a business a competitive advantage over its competitors.
4.1.1 Information Systems In the Functional Areas of Business
Studies
have shown that the involvement of managers and decision makers in all aspects
of information systems is a major factor for organizational success, including
higher profits and lower costs.
Information
systems are used in all functional areas and operating divisions of business.
The
principal business functions are;
- Sales
and Marketing: ensuring that the firms products meet the needs of the marketplace,
developing a market for those products, providing them at the right time for
the right price.
- Production:
creating or adding value by producing goods or offering services. In firms that
produce goods, the production function is known as manufacturing.
- Accounting
and Finance: managing the funds of the enterprise.
- Human Resources: developing the personnel of the firm.
Let’s
consider application of information systems in these functional areas of a
business.
Sales
and Marketing: to develop new goods and services (product analysis), determine
the best location for production and distribution facilities (place or site
analysis), determine the best advertising and sales approaches (promotion
analysis),and set product prices to get the highest total revenues (price
analysis).
Manufacturing:
to process customer orders, develop production schedules, control inventory levels,
and monitor product quality.
In
addition, information systems are used for product design. Applications used
include
Computer-Assisted
Design *CAD ). Others include manufacturing of items using Computer-
Assisted
Manufacturing *or CAM ),and integration of multiple machines or pieces of equipment
using computer-integrated manufacturing ,or CIM.
Finance
and Accounting: to forecast revenues and business activity, determine the best sources
and uses of funds, manage cash and other financial resources, analyze
investments, and perform audits to make sure that the organization is
financially sound and that all financial reports and documents are accurate.
Human
Resource Management: to screen applicants, administer performance tests to employees,
monitor employee productivity, and more.
4.1.2 Information Systems in Industry
Information
systems are used in almost every industry or field.
The
airline industry employs Internet auction sites to offer discount fares and
increase revenue.
Investment
firms use information systems to analyze stocks, bonds, options, the future
market, and other financial instruments, as well as to provide improved
services to their customers.
Banks
use information systems to help make sound loans and good investments, as well
as to provide online check payment for account holders.
The
transportation industry uses information systems to schedule trucks and trains
to deliver goods and services at the lowest cost.
Publishing
companies use information systems to analyze markets and to develop and publish
newspapers, magazines, and books.
Healthcare
organizations use information systems to diagnose illnesses, plan medical treatment,
track patient records, and bill patients.
Retail
companies are using the Web to take customer orders and provide customer
service support. Further, they use information systems to help market products
and services, manage inventory levels, control the supply chain, and forecast
demand.
Power
management and utility companies use information systems to monitor and control
power generation and usage.
Professional
services firms employ information systems to improve the speed and quality of services
they provide to customers.
Management consulting firms use intranets and extranets to provide
information on products, services, skill levels, and past engagements to its
consultants.
Apart from business organizations, non-governmental organizations
as well as Government organizations use information systems to streamline its
operations in order to achieve efficiency and effectiveness.
4.2 Managerial Challenges of IT
As discussed in the above sections, it is evident that Computer
based information systems
(CBIS) provide many capabilities to enhance the business
activities of an organization.
However, there are many challenges faced by mangers of IT-IS.
As a prospective manager or user of IS, it is important to
understand the difficulties that can be presented by the use of information
technology in order to confront and overcome these difficulties.
Success and Failure with IT
CBIS,though heavily dependent on information technologies, are
designed, operated and used by people in a variety of organizational settings
and business environments. Information systems and their technologies must be
managed to support the business strategies, business processes, and
organizational structures and culture of a business enterprise. Therefore, success
of such a system should not only be measured by terms of efficiency (based on
cost, time and use of information resources). It should also be measured by
terms of effectiveness in supporting the business strategies, enabling business
processes, enhancing its organizational structures and culture and increasing
the customer and business value of the enterprise.
However, IS can be mismanaged or misapplied creating both
technical problems as well as disastrous failures.
For example it is documented that many of the Enterprise Resource
Planning (ERP) system
implementations has ended up in failures as many of the
professionals do not take into consideration factors such business processes
and cultural change that takes place due to the introduction of these systems.
IS Solution Development Challenges
Development of successful information systems to a business
problem is a major challenge faced by the professionals. If the developed
system does not support the requirement of the organization, the purpose of
developing such a system would be completely lost. IS professionals are responsible
for proposing or developing of new or improved information technologies for the
company. Typically, a systematic development process is used to develop most
IS. In this process, end users and information specialists design information system
applications based on an analysis of the business requirements of an
organization.
Examples of other activities include investigating the economic or
technical feasibility of a proposed application, acquiring and learning how to
use the software required to implement the new system, and making improvements
to maintain the business value of the system. The development process will be
discussed in detail in chapter 7 and 8.
Challenges of Ethics and IT
IS professional need to address ethical responsibilities generated
by the use of information technology. For example, they need to address
questions such as what uses of information technology might be considered
harmful, improper to other individuals or to the society?
what is the proper business use of the Internet and an
organization’s IT resources? what does
it take to be a responsible end user of IT? what action should be
taken to address computer crime ? etc. These are some of the ethical dimensions
discussed in detail in chapter 9.
Human Resources Challenges
Success or failure of an organization largely rest on the human
resources of the organization.
Recruiting staff with proper qualifications is a problem faced by
many IS managers today.
One reason for this is the rapidly changing technological and
business developments.
5 Importance of Learning Information Systems
Information systems are used in almost every imaginable career
area.
- Sales representatives use information systems to advertise
products, communicate with customers, and analyze sales trends.
- Managers use them to aid them in decision making, such as deciding
to build a new manufacturing plant or research a new cancer drug.
- Corporate lawyers use information systems to develop contracts and
other legal documents for their firm.
- From a small music store to huge multinational companies,
businesses of all sizes could not survive without information systems to
perform various activities of business functions such as accounting and
finance.
- Why learn about information systems? What is in it for you? Regardless
of your
chosen career, you will find that information systems are
indispensable tools to help you achieve your career aspirations.
5.1 Computer and Information Systems Literacy
In the twenty-first century, business survival and prosperity
continue to become more difficult.
In addition, business issues and decisions are becoming more
complex and must be made faster.
Whatever career path you take, an understanding of information
systems will help to cope, adapt, and prosper in this challenging environment.
To meet these personal and organizational goals, you must acquire both
computer literacy and information systems literacy.
Computer literacy is the knowledge of computer systems and
equipment and the way they function. It stresses the knowledge of equipment and
devices (hardware), programs and instructions (software), databases, and
telecommunications.
Information systems literacy goes beyond the knowledge of the
fundamentals of computer systems and equipment. It can involve knowledge of how
and why people (managers, employees, stockholders, and other
individuals) use information technology; knowledge of organizations,
decision-making approaches, management levels, and information needs; and
knowledge of how organizations can use computers and information systems to achieve
their goals.
Knowing
how to deploy transaction processing, management information, decision support,
and special-purpose systems to help an organization achieve its goals is a key
aspect of information systems literacy. In short, information literacy means
the ability to solve problems, taking advantage of information technology and
networks.
Examples:
As
a computer literate person you may be able to select the personal computer
equipment you need, carry out preparation of your assignments with suitable
software and use the Internet to communicate with your friends.
Knowing how to use hardware and software to increase profits, cut costs,
improve productivity, and increase customer satisfaction is an example of
information systems literacy. |
| Information Literacy |
5.2 Information Systems Careers
Information systems personnel typically work in an IS department.
They may also work in other functional departments or areas in a support
capacity. In general, IS personnel are charged with maintaining the broadest
perspective of organizational goals. IS personnel operate as an internal
consultant to all functional areas of the organization, being knowledgeable and
competent in bringing the power of IS to bear throughout the organization.
For most medium-to large-sized organizations, information
resources are typically managed through an IS department. In smaller
businesses, one or more people may manage information resources, with support
from outside services—outsourcing1. Outsourcing is also popular with larger
organizations.
In a typical IS department the head of the department is known as
the Chief Information
Officer (CIO)/IT Director and reports to the
Chief Executive Officer (CEO).
As
shown in Figure below, the IS organization has three primary responsibilities: operations,
systems development, and support.
Figure:
 |
| Primary responsibilities of an Organization |
Operations
The
operations component of a typical IS department focuses on the use of
information systems in corporate or business unit computer facilities.
It
tends to focus more on the efficiency of IS functions rather than their
effectiveness.
The
primary function of a system operator is to run and maintain IS equipment.
System
operators are responsible for starting, stopping, and correctly operating
computer systems, networks, tape drives, disk devices, printers, and so on.
Other
operations include scheduling, hardware maintenance, and preparation of input
and output.
Data-entry
operators convert data into a form the computer system can use. They may use
terminals or other devices to enter business transactions, such as sales orders
and payroll data. Increasingly, data entry is being automated—captured at the
source of the transaction rather than being entered later.
In
addition, companies may have local area network and Web or Internet operators
who are responsible for running the local network and any Internet sites the
company may have.
Systems Development
The
systems development component of a typical IS department focuses on specific development
projects and ongoing maintenance and review.
System
development includes system analysts and programming staff.
The
role of a systems analyst is multifaceted. Systems analysts help users
determine what outputs they need from the system and construct the plans needed
to develop the necessary programs that produce these outputs.
Systems
analysts then work with one or more programmers (team work) to make sure that the
appropriate programs are purchased, modified from existing programs, or
developed.
The
major responsibility of a computer programmer is to use the plans developed by
the systems analyst to develop or adapt one or more computer programs that
produce the desired outputs.
The
main focus of systems analysts and programmers is to achieve and maintain IS effectiveness.
With
the dramatic increase in the use of the Internet, intranets, and extranets,
many companies have Web or Internet developers who are responsible for
developing effective and attractive Internet sites for customers, internal
personnel, suppliers, stockholders, and others with a business relationship
with the company.
Support
The
support component of a typical IS department focuses on providing user
assistance in the areas of hardware and software acquisition and use, data
administration, user training and assistance, and Web administration.
Because
IS hardware and software are costly, especially if purchase mistakes are made,
the acquisition of computer hardware and software is often managed by a
specialized support group.
This
group sets guidelines and standards for the rest of the organization to follow
in making purchases.
Gaining
and maintaining an understanding of available technology, evaluation of these technologies,
as well as vendor relationship management is an important part of the acquisition
of information systems.
A
database administrator focuses on planning, policies, and procedures regarding
the use of corporate data and information.
For
example, database administrators develop and disseminate information about the corporate
databases for developers of IS applications.
In
addition, the database administrator is charged with monitoring and controlling
database use.
User
training is a key to get the most from any information system.
The
support area insures that appropriate training is available to users.
Training
can be provided by internal staff or from external sources. For example,
internal support staff may train managers and employees in the best way to enter
sales orders, to receive computerized inventory reports, and to submit expense
reports electronically. Companies also hire outside firms to help train users
in other areas, including the use of word processing, spreadsheets, and
database programs.
Web
administration is another key area of the support function.
With
the increased use of the Internet and corporate Web sites, Web administrators
are sometimes asked to regulate and monitor Internet use by employees and
managers to make sure that it is authorized and appropriate.
Web
administrators also are responsible for maintaining the corporate Web site.
The
support component typically operates the information center.
An
information center provides users with assistance, training, application
development, documentation, equipment selection and setup, standards, technical
assistance, and troubleshooting.
Other IS Careers
Apart
from careers associated with a typical IS department in an organization, IS
personnel can work for consulting firms such as IBM and EDS. Other jobs include
working in IT education,
Sales/Marketing
of IT services among others.
Skills Required by IS Personnel
The
type of skills required by an IS personnel may vary depending on their job
description.
However,
generally, in addition to technical skills, IS personnel need to develop
written and verbal communication skills, leadership skills, inter-personal
skills, analytical and administration skills among others. As most careers
related to IS involves considerable amount of team work,
it
is important to acquire skills required to work efficiently and effectively in
a group/team.
According
to George Volutes, enterprise technology programs manager for Deutsche Asset
Management
Technology, “We have to get away from strict programming and systems development.
Those are skills to get into the field, but we have to train our technology people
more like business people and arm them with strong communications skills.”
For further readings please follow :http://en.wikipedia.org/wiki/Information_systems
References:
BIT student notes.
BIT student notes.
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