Chapter-I: AZAD College
Chapter-I: AZAD College
Chapter-I: AZAD College
INFORMATION SYSTEMS
By: M Rafeeq
Chapter- I
OVER VIEW OF INFORMATION SYSTEMS
Definitions:
Data: A data is a collection of number of related observations or raw facts. (Or) Individual
elements of a transaction. [Data is raw material of information]
The data can be text, audio, video, number, images or any combination of these.
E.g.: item number, item quantity, price on sales order transaction.
Information: Information is data placed in meaningful and useful context for an end user.
System: A system is a group of interrelated components working together towards a common
goal by accepting inputs and producing output in an organized transformation process.
A system is an integrated set of components or entities that interact to achieve a particular
function or goal.
Management: “It is the art of getting things done through and with the people in formally
organized groups.”
Information system: A set of people, procedures and resources that collects, transforms and
disseminates information in an organization.
Knowledge
Information
Systems
Systems
Data Information (Interpret, Knowledge
(Aggregate,
relate,
summarize,
synthesize,
analyze, etc)
etc)
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3. Personnel - This department is related to service contracts, fringe benefits, and
hourly/monthly rates. Management seeks information pertaining to the number of full-time
and part-time employees, supervisor reports and manpower.
4. Public relations - This bridges the gap between the outside world and the organization.
E.g.: Union contract negotiations.
5. Sales - This department produces information pertaining to sales of regional, total sales
forecast, actual sales and periodic sales reports.
6. Market research - This department gather information pertaining to the firm’s market
potential consumer behavior and competitive circumstances.
7. Production - Data is maintained to utilization, scheduling priority, number of machines,
equipment’s and facilities.
8. Purchasing - This is responsible for receiving a constant flow of raw material, machinery,
equipment, and office supplies.
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2) Operational decisions that control physical process are produces by Process control
systems (PCS).
3) Office communications and productivity are supported Office automation systems
(OAS).
2. Management Information Systems: -
These IS’s provide information to support management decision Making.
1) Prescribed and preplanned reporting to managers is accomplished by Information
reporting systems (IRS).
2) Interactive and Ad hoc support for decision-making by managers is accomplished by
Decision support systems (DSS).
3) Critical information for top management is provided by Executive information
systems (EIS).
Levels of management: -
Activities of an organization
Top
Level Strategic planning
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Strategic Information: -
The strategic level management is mostly concerned with planning information
and control of information is very limited.
Strategic information environs about population changes, natural resources, new
technologies, new products, competitors, political, legal and economic changes. Top
management needs strategic information for is long-term planning, which affects the
whole or a significant part of the organization over a long period of time.
Tactical Information: -
Tactical information is required for short-term planning by middle level
managers. Sales analysis, forecasts, budgeting, etc are tactical information. This
information arises mostly from current internal activities and from externally such as
competitor information. Its impact is short term and affects only a department.
Operational Information: -
Operational level management requires a large amount of control information and
small amount of planning information.
Operational information relates to very short period that may be a few hours to a
few weeks. It may be about current stock levels inventory, outstanding orders, work
schedule for next shift, etc. This information can be generated from current activity data
arising from internal sources. This information is of immediate use and covers only a
limited area of operation of the organization.
System concept:
A system may have single input and multiple outputs or may have several inputs and
outputs.
All the systems operate in an environment. The environment may influence the
system in its design and performance.
Environment
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Definition:
A system is an integrated set of components, or entities, that interact to achieve a
particular function or goal.
Systems are composed of interrelated and interdependent subsystems.
E.g.: College class (consists of instructor, students, text books & facilities).
or
A system is a group of interrelated components working together towards a common
goal by accepting inputs and producing outputs in an organized transformation process.
A system (also called Dynamic system) has basic interacting components or
functions.
1. Input: Involves capturing and assembling elements that enter the system to be processed.
E.g.: Raw materials, data.
. 2. Processing: Involves transformation processing that converts input into output.
E.g.; manufacturing process, data calculation.
3. Output: Involves transferring elements that have been produced by the transformation
process to the ultimate destination.
E.g.: finished products, human services.
ENVIRONMENT
System Boundary
OTHER SYSTEMS
ENVIRONMENT
SYSTEM
Subsystem Logical
6 Boundaries
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Accounting
Department
Business org.
Society at large
System boundaries:
Every system has a boundary that defines its scope of activities.
E.g.: -Responsibility in handling class, & responsibility in managing, motivating
and evaluating the performance etc.
System boundaries are also established within a business system.
Sub system:
Systems may consist of numerous subsystems, each of which has elements, interactions
and objectives.
Subsystems perform specialized tasks related to the overall objectives of the total
system. E.g.: - An education system consists of individual courses that are subsystems and
each gains different knowledge.
In business system, various functions are subsystems.
E.g.: Marketing, personnel, production and finance are subsystems.
Each subsystem uses its resources to meet specific objectives.
Interface:
An interface is a connection of system or subsystem boundaries.
An interface serves as medium to convey the output from our system to the input of another
system.
E.g.: Interface between inventory control and purchasing.
System feedback:
Feedback is an indicator of current performance rates when compare to a set of
standards with effective feedback, continuing adjustments in the activities of a system can
be made to assure that the system achieves its goals.
Measuring performance against a standard is an effective control mechanism.
Feedback usually increases efforts.
E.g.: Feedback of new products fare in certain markets.
Feedback of students from the examination
Feedback
The information systems providing feedback can be used to allocate resources
effectively, such as inventory and personnel are called tactical system.
System Entropy:
It is a state/condition that occur without maintenance.
E.g.: - Employees not having opportunities to learn new concept and techniques.
The process of maintaining system means entropy is to be reduced.
WORKING OF A SYSTEM:
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E.g. Cricket team.
To achieve its objectives i.e., to win.
Manager recruit players, organizes training Programmes.
Accepts feedback from external environment to organize its resources more
effectively. Feedback can be from sports writers, team manager, fans, and coach’s gives
about their performance
Goal is to win. So recruit highly talented players
New players have to be brought to fill critical positions and others need to be
retrained.
Purpose of this system is to become competitive in its environment
System concepts in business:
System is divided into interrelated parts called subsystems, designed to accomplish
goals.
Each subsystem is a self-contained and a part of a larger system
For E.g.: -
Marketing research subsystem obtains information from customers, about modification
of products and services. This Marketing Research subsystem transmits this information to
manufacturing subsystem that builds product design in its processes. Finally the marketing
subsystem sells the finished products to customer.
If technical problem occurs service subsystem is need to provide follow-up support.
The interactions are below:
Market Research subsystem:
Input Process Output
Customer
Needs
Manufacturing subsystem:
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4. Evaluate these alternatives.
5. Select and implement the best alternative.
6. Follow up to determine where the solution is working.
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basis. Collected feedback consists of changing information models that can react to changes
in the external environment.
Nolan and Haeckel referred this responsiveness as “Managing by Wire”.
Business Learning Loop
What’s going on out here?
(Environmental information)
SENSE INTERPRET
ACT DECIDE
Learning Organization: -
The key to sustain competitive advantage is: To learn and the ability to learn faster
than the competitor.
The fifth discipline: The Art and Practice of the learning Organization.
Def.: - (Peter Singe)
Organizations where people continually expand their capacity to create the results
they truly desire, where new and expansive patterns of thinking are nurtured, where
collective aspiration is set free and where people are continually learning how to learn
together”.
Strategic
Planning Support for
(Long-range decisions
Plans)
Tactical Demand
(Budget reports
Plans)
Operations Scheduled
(Day-to-day reports
transactions)
1. Operational Systems: -
- Primary concern to collect, validate and record transactional data describing
acquisition.
E.g.: - Financial data like accounts receivable, payable, payroll and receipts.
- For sales invoice is generated
- Involves in order processing, inventory and billing. (Original transactions)
Characteristics of Operational Information Systems
a) Repetitiveness – Information is generated at periodic intervals, such as daily,
weekly or monthly.
b) Predictability – Information usually does not contain any surprises or unexpected
results. E.g.: - Customers are billed for what they purchased during the month.
c) Emphasis on the past – Information describes past activities of the organization.
E.g.: - Pay roll system, stock reports, invoices, etc.
d) Detailed nature – Information with all necessary data.
E.g.: - Customers invoices (consists of data ordered, purchased, quantity, price etc.)
e) Internal data – Data on internal sources i.e., internal documents.
E.g.: - Time cards, employee master records.
f) Structured form – Data input is generally structured
g) Great accuracy – Input and output information is highly accurate and carefully
checked.
2. Tactical Systems: -
For middle level managers the information need is to monitor and control
operations and to allocate their resources effectively.
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2) Exception reports – Warns managers when results from a particular
operation exceeds or likely to exceed.
E.g.: - Overtime hours, sales personnel’s sales are decreased.
3) Adhoc reports – Reports that managers need, usually quickly, that may
never be needed again. This is to solve a unique problem.
E.g.: - Total number of employees absent during the week.
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The evolution of data processing depends on achieving a balance among technology,
application development, user involvement and organizational control.
Nolan has given a Six-stage theory in order to experience the growth characteristics in
the organization.
1. Initiation
2. Contagion
3. Control
4. Integration
5. Data administration
6. Maturity
1. Initiation: In this stage cost effective transaction processing systems like accounts
receivable and payroll are introduced. It requires technical specialists from accounting
department. This stage has few controls over data processing expenditure and users
have “hands off ” attitude.
2. Contagion: In this stage a proliferation of applications occurs and data processing
specialists will be given the go-ahead to pursue different automation opportunities. In
this stage expenditures will be increased (i.e., for computers and personnel) so
corporate management is concerned about the benefits for the investment in
information systems.
3. Control: To control data processing expenditures management organizes steering
committees with representatives from user areas, who become responsible for setting
priorities for application development projects. MIS controls all its internal activities;
makes project development plans and system development activities.
4. Integration: Existing information systems are integrated by using database and
telecommunications technologies.
5. Data administration: Introduction of data base technologies shifts from traditional
files supporting one application to design logical database supporting multiple
applications.
6. Maturity: Due to arriving new technologies and competitors a number of changes will
occur
1. To improve operational efficiency --- cut cost and improve the quality and delivery
of its products or services. E.g.: Computerized.
2. To promote business innovation --- production of new products, services (ATM)
and processes (CAD).
3. To build strategic information resources --- to meet challenges from the
competitive forces to confront any organization.
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Due to increasing development in Information Technology (E.g.: -
Telecommunications, computer-aided design and office automation) organizations are
looking for new business opportunities and strategies.
Gregory parsons have given three-level framework to help managers to assess the
current and potential effect of Information Technology.
The three levels that affect IT are:
1. Industry level
2. Firm level
3. Strategy level
1. Industry level: IT changes the nature of the industry, where the firm competes
with other firms. IT at Industry level effect on:
a) Products and Services: IT changes the nature of the product and services by
altering the product development cycle or by increasing the speed of the
distribution.
E.g.: - Videoconferencing --- used in chain hotels.
Computer based word processing
b) Production economics: IT changes the nature of the production economics.
E.g.: - National wide Inventory tracking
c) Markets: IT changes the nature of markets, as many consumers are computer
literate.
E.g.: - ATM’s (Automated Teller Machine)
POS systems (Point Of Sale)
2. Firm level: There are five competitive forces, which determine the effect of
Information Technology.
a) Buyers: This force reduces industry’s profit, which can be controlled by
information technology using introducing switching costs.
E.g.: - Analyze buyer profitability
Analyze the profitability of specific market groups
b) Suppliers: Firms can compete more effectively if there are able to control the
power of suppliers.
E.g.: - Robots used in production
c) Substitute products: Customer finding cost-effective substitute products and
services will hurt the firm’s profits. So, firm should reduce cost in order not to
go to substitute products.
d) New entrants: New entrants can draw profits from firms in an industry, if they
create effective entry barriers by constructing on-line telecommunication
systems networks.
E.g.: - Airline industry with on-line reservation systems.
e) Rivals: All industries have competitors, and are valuable because it enables to
establish profits from successful firms.
E.g.: - ATM network, on-line reservation systems
3. Strategy level: The three generic strategies to achieve competitive edge are:
a) Low-cost leadership: It is the ability to reduce costs or to improve
productivity with out incurring additional costs.
E.g.: -Office automation, Inventory Control Systems
Production control systems
b) Product differentiation: It is an added value or having unique features to a
product to improve its image, quality or service.
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E.g.: - Computer-aided Design is used in shoe, automobiles for better
quality product designs.
c) Market specialization: It is achieved by concentrating on a particular market
(Niche product) i.e. it provides information about the profitability of specific
market segments, which enables manufactures to address these specific needs.
E.g.: - Electronic library access
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