An Information Systems Framework
An Information Systems Framework
FRAMEWORK
Dr. Mohammad Noor Alam
Assistant Professor
Jeddah Community College
King Abdul Aziz University
AIS SUBSYSTEMS
Transaction Processing System
The TPS is central to the overall function of the information system
by converting economic events into financial transactions,
recording financial transactions in the accounting records (journals
and ledgers), and distributing essential financial information to
operations personnel to support their daily operations.
The TPS deals with business events that occur frequently. In a given
day, a firm may process thousands of transactions. To deal
efficiently with such volume, similar types of transactions are
grouped together into transaction cycles. The TPS consists of three
transaction cycles: the revenue cycle, the expenditure cycle, and
the conversion cycle. Each cycle captures and processes different
types of financial transactions.
End Users
End users fall into two general groups: external and internal.
External users include creditors, stockholders, potential
investors, regulatory agencies, tax authorities, suppliers, and
customers. Institutional users such as banks, and the Internal
Revenue Service (IRS) receive information in the form of financial
statements, tax returns, and other reports that the firm has a legal
obligation to produce. Trading partners (customers and suppliers)
receive transaction-oriented information, including purchase
orders, billing statements, and shipping documents.
Data Sources
Data sources are financial transactions that enter the information
system from both internal and external sources. External financial
transactions are the most common source of data for most
organizations. These are economic exchanges with other business
entities and individuals outside the firm. Examples include the sale
of goods and services, the purchase of inventory, the receipt of
cash, and the disbursement of cash (including payroll).
Internal financial transactions involve the exchange or movement of
resources within the organization. Examples include the movement
of raw materials into work-in-process (WIP), the application of labor
and overhead to WIP, the transfer of WIP into finished goods
inventory, and the depreciation of plant and equipment.
Data Collection
Data collection is the first operational stage in the information
system. The objective is to ensure that event data entering the
system are valid, complete, and free from material errors. In many
respects, this is the most important stage in the system. Should
transaction errors pass through data collection undetected, the
system may process the errors and generate erroneous and
unreliable output. This, in turn, could lead to incorrect actions and
poor decisions by the users.
Data Processing
Once collected, data usually require processing to produce
information. Tasks in the data processing stage range from simple
to complex. Examples include mathematical algorithms (such as
linear programming models) used for production scheduling
applications, statistical techniques for sales forecasting, and
posting and summarizing procedures used for accounting
applications.
Database Management
The organizations database is its physical repository for financial
and nonfinancial data. We use the term database in the generic
sense. It can be a filing cabinet or a computer disk. Regardless of
the databases physical form, we can represent its contents in a
logical hierarchy. The levels in the data hierarchy attribute,
record, and file
Information Generation
Information generation is the process of compiling, arranging,
formatting, and presenting information to users. Information can
be an operational document such as a sales order, a structured
report, or a message on a computer screen. Regardless of physical
form, useful information has the following characteristics:
relevance,
timeliness,
accuracy,
completeness,
and
summarization.
RELEVANCE
The contents of a report or document must serve a purpose. This
could be to support a managers decision or a clerks task. We
have established that only data relevant to a users action have
information content. Therefore, the information system should
present only relevant data in its reports. Reports containing
irrelevancies waste resources and may be counterproductive to the
user. Irrelevancies detract attention from the true message of the
report and may result in incorrect decisions or actions.
ACCURACY
Information must be free from material errors. information must
be perfectly accurate. In other instances, the level of accuracy
may be lower. Material error exists when the amount of inaccuracy
in information causes the user to make poor decisions or to fail to
make necessary decisions. We sometimes must sacrifice absolute
accuracy to obtain timely information. Often, perfect information is
not available within the users decision time frame. Therefore, in
providing information, system designers seek a balance between
information that is as accurate as possible, yet timely enough to
be useful.
COMPLETENESS
No piece of information essential to a decision or task should be
missing. For example, a report should provide all necessary
calculations and present its message clearly and unambiguously.
SUMMARIZATION
Information should be aggregated in accordance with the users
needs. Lower level managers tend to need information that is
highly detailed. As information flows upward through the
organization to top management, it becomes more summarized.
Feedback
Feedback is a form of output that is sent back to the system as a
source of data. Feedback may be internal or external and is used
to initiate or alter a process. For example, an inventory status
report signals the inventory control clerk that items of inventory
have fallen to, or below, their minimum allowable levels. Internal
feedback from this information will initiate the inventory ordering
process to replenish the inventories. Similarly, external feedback
about the level of uncollected customer accounts can be used to
adjust the organizations credit-granting policies.