UNIT 2 OVERVIEW OF INFORMATION SYSTEMS

Information System (IS): Interrelated components working together to collect, process, store and disseminate information to support decision making, coordination, control, analysis, and visualisation in an organisation. Information: Data that have been shaped into a form that is meaningful and useful to human beings. Data: Streams of raw facts representing events occurring in organisations or the physical environment before they have been organised and arranged into a form that people can understand and use. Three activities in an IS produces information that organisations need: Input, Processing, Output and Feedback. Input: The capture or collection of raw data from within the organisation or from its external environment for processing in an information system. Processing: The conversion, manipulation, and analysis of raw input into a form that is more meaningful to humans. Output: The distribution of processed information to the people or activities where it will be used. Feedback: Output that is returned to the appropriate members of the organisation to help them evaluate or correct input. Computer-Based Information Systems (CBIS): Information systems that rely on computer hardware and software for processing and disseminating information. Formal System: System resting on accepted and fixed definitions of data and procedures, operating with predefined rules. Distinctions between Computer, Computer Program and Information System: Computers provide the equipment for storing and processing information. Computer programs (software) are sets of operating instructions that direct and control computer processing. Computers and Software are the building blocks of Information Systems. 1

Information Systems are more than computers. Using information systems effectively requires an understanding of the organisation, management, and information technology shaping the systems. All information systems can be described as organisational and management solutions to challenges posed by the environment. Organisation is comprised of: people, structure, operating procedures, politics and culture. Standard Operating Procedures (SOPs): Formal rules for accomplishing tasks that have been developed to cope with expected situations. Many firms SOPs are incorporated their IS. Knowledge Workers: People such as engineers or architects who design products or services and create knowledge for the organisation. Data Workers: People such as secretaries or bookkeepers who process the organisations paperwork. Product or Service Workers: People who actually produce the products or services of the organisation. Mangers perceive business challenges in the environment; they set the organisational strategy for responding, and they allocate the human and financial resources to achieve the strategy and co-ordinate the work. Senior Mangers: People occupying the topmost hierarchy in an organisation and who are responsible for making long range decisions. Middle Managers: People in the middle of the organisational hierarchy who are responsible for carrying out the plans and goals of senior managers. Operational Manager: People who monitor the day-to-day activities of the organisation. Information systems technology is one of many tools available to managers for coping with change. CBIS use computer hardware, software, storage and telecommunications technologies.

Computer Hardware: Physical equipment used for input, processing, and output activities in an information system. Computer Software: Detailed, pre-programmed instructions that control and coordinate the work of computer hardware components in an information system. Storage Technology: Physical media and software governing the storage and organisation of data for use in an information system. Telecommunications Technology: Physical devices and software that link various computer hardware components and transfer data from one physical location to another. Network: Two or more computers linked to share data or resources such as a printer. Contemporary approaches to Information Systems: The study of information systems deals with issues and insights contributed from technical and behavioural disciplines. Technical Approaches (Operations Research, Computer Science, Management Science) Behavioural Approaches (Psychology, Political Science, Sociology). Another approach is the Socio-technical approach: In a socio-technical perspective, the performance of a system is optimised when both the technology and the organisation mutually adjusted to one another until a satisfactory fit is obtained. THE STRATEGIC ROLE OF INFORMATION SYSTEMS Key System Applications in the Organisation The Strategic Role of Information Systems How Information Systems Promote Quality Key System Applications in the Organisation Because there are different interests, specialities, and levels in an organisation, there are different kinds of systems. No single system can provide all the information an organisation needs. DIFFERENT KINDS OF SYSTEMS Four main types of information systems serve different organisation levels: operational-level systems, knowledge-level systems, management-level systems, and strategic-level systems. These four can be further divided into five

functional areas: sales and marketing, manufacturing, finance, accounting, and human resources. Operational-level systems support operational managers by keeping track of the elementary activities and transactions of the organisation, such as sales, receipts, cash deposits, payroll, credit decisions, and flow of materials in a factory. The principal purpose of systems at this level is to answer routine questions and to track the flow of transactions through the organisation. Knowledge-level systems support knowledge and data workers in an organisation. The purpose of knowledge-level systems is to help the business firm integrate new knowledge into the business and to help the organisation control the flow of paperwork. Knowledge-level systems, especially in the form of workstations and office systems, are the fastest growing applications in business today. Management-level systems are designed to serve the monitoring, controlling, decision-making, and administrative activities of middle managers. Strategic-level systems help senior management tackle and address strategic issues and long-term trends, both in the firm and in the external environment. Their principal concern is matching changes in the external environment with existing organisational capability. SIX MAJOR TYPES OF SYSTEMS In this section, we describe the specific categories of systems serving each organisational level and their value to the organisation. The organisation has executive support systems (ESS) at the strategic level; management information systems (MIS) and decision-support systems (DSS) at the management level; knowledge work systems (KWS) and office automation systems (OAS) at the knowledge level.

Systems at each level in turn are specialised to serve each of the major functional areas. Thus, the typical systems found in organisations are designed to assist workers or managers at each level and in the functions of sales and marketing, manufacturing, finance, accounting, and human resources.

Characteristics of Information Processing Systems: Type of System ESS DSS Data Inputs Aggregate data; external, internal Low-volume data; analytic models Processing Graphics; simulations, interactive Interactive; simulations, analysis Information Outputs Projections, responses to queries Special reports, decision analysis; responses to queries Summary and exception reports Models; graphics Documents; schedules; mail Detailed reports; lists; summaries Users Senior Managers Professionals, staff managers

MIS

KWS

OAS

Summary transaction data; highvolume data; simple models Design specifications; knowledge base Documents, schedules Transactions; events

Routine reports, simple models; low-level analysis Modelling; simulations Document management; scheduling; communication Sorting; listing; merging; updating

Middle managers

Professionals; technical staff Clerical workers Operations personnel; supervisors

TPS

Transaction Processing Systems (TPS) are the basic business systems that serve the operational level of the organisation. A transaction processing system is a computerised system that performs and records the daily routine transactions necessary to the conduct of the business. Examples are sales order entry, hotel reservation systems, payroll, employee record keeping, and shipping. Knowledge Work Systems (KWS) and Office Automation Systems (OAS) serve the information needs at the knowledge level of the organisation. Knowledge work systems aid knowledge workers, whereas office automation systems primarily aid data workers (although they are also used extensively by knowledge workers. In general, knowledge workers are people who hold formal

university degrees and who are often members of a recognised profession like engineers, doctors, lawyers, and scientists. Office automation systems (OAS) are information technology applications designed to increase the productivity of data workers in the office by supporting the co-ordinating and communicating activities of the typical office. Word processing, desktop publishing and document imaging systems are OAS applications. Management Information Systems Management information systems (MIS) serve the management level of the organisation, providing managers with reports and, in some cases, with on-line access to the organisations current performance and historical records. Typically, they are oriented almost exclusively to internal, not environmental or external events. MIS primarily serve the functions of planning, controlling, and decision making at the management level. Generally, they are dependent on underlying transaction processing systems for their data. MIS summarise and report on the basic operations of the company. The basic transaction data from TPS are compressed and are usually presented in long reports that are produced on a regular schedule. Characteristics of Management Information Systems: 1. MIS support structured and semi-structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff. 2. MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-to-day control of operations. 3. MIS reply on existing corporate data and data flows. 4. MIS have little analytical capability. 5. MIS generally aid in decision making using past and present data. 6. MIS are relatively inflexible. 7. MIS have an internal rather than an external orientation. 8. Information requirements are known and stable. 9. MIS often require a lengthy analysis and design process. Decision-Support Systems Decision-support systems (DSS) also serve the management level of the organisation. DSS help managers make decisions that are semi-structured, unique, or rapidly changing, and not easily specified in advance. DSS have to be responsible enough to run several times a day in order to correspond to changing conditions. While DSS use internal information from TPS and MIS,

they often bring in information from external sources, such as current stock prices or product prices of competitors. Characteristics of Decision-Support Systems 1. 2. 3. 4. 5. DSS offer users flexibility, adaptability, and a quick response. DSS allow users to initiate and control the input and output. DSS operate with little or no assistance from professional programmers. DSS provide support for decisions and problems whose solutions cannot be specified in advance. DSS use sophisticated analysis and modelling tools.