chap 1_fundamentals of info. systems

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Chapter 1


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Information systems and Information Technology are avital components of successful business andorganizations.

They are key players in expanding the role of business. They improve the efficiency and effectiveness of almost all

business processes. IS and IT are also instrumental in decision-making,

workgroup collaboration etc, thus making the organizationearn competitive advantage over others.

They are often used by product development teams,

customer support processes like CRM, electroniccommerce transactions and many such business activities. Hence, we can say that IS and IT are necessary ingredients

for business success in today's world. All the above reasons, make it essential to study, IS and IT,

and ways of managing them.

Teena Y. Sharma 2Fundamentals of Info. Systems


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Definition:An Information System anyorganized combination of people, hardware,software, communication networks and dataresources that stores, retrieves, transforms

and disseminates information in anorganization.

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A Management Information System(MIS) providesinformation that organizations need to managethemselves efficiently and effectively

Information Systems are systems used formanaging three primary components: technology,

people (individuals, groups, or organizations), anddata (information for decision making).

Facilitate strategic and operational activities

4Teena Y. SharmaFundamentals of Info. Systems

Information PeopleTechnology

Information System
http://www.google.co.in/url?sa=i&rct=j&q=management+of+information+systems&source=images&cd=&cad=rja&docid=fB3VP-W1beIgdM&tbnid=aKP--cZU_Pmt9M:&ved=0CAUQjRw&url=http://online.cuw.edu/programs/graduate/mba/management-information-systems/&ei=GGAkUdOvN8SViAeg4YCYDg&bvm=bv.42661473,d.bmk&psig=AFQjCNEdVHxdTwLB2MHSHCJz6_680J8SWw&ust=1361424768187981http://www.google.co.in/url?sa=i&rct=j&q=compuetr+technology&source=images&cd=&cad=rja&docid=XG58JPxV4qA_vM&tbnid=zanlVgmJT55v6M:&ved=0CAUQjRw&url=http://depositphotos.com/1477018/stock-photo-Computer-technology-Background.html&ei=Yl8kUanjBuWQiAe42oF4&bvm=bv.42661473,d.bmk&psig=AFQjCNFsN5I_nDcv6JsSWW1Ju5dFBeZdBQ&ust=1361424602814190http://www.google.co.in/url?sa=i&rct=j&q=people&source=images&cd=&cad=rja&docid=cVQ-Hf722xhrpM&tbnid=7RQvVIF8SDcKCM:&ved=0CAUQjRw&url=http://abcwednesday-mrsnesbitt.blogspot.com/2012/05/p-is-for-people.html&ei=8V4kUbeGDIygigf8s4HwBA&bvm=bv.42661473,d.bmk&psig=AFQjCNHhPj1M5UGXSKpRtIWqM2IU5VdsNA&ust=1361424489551316http://www.google.co.in/url?sa=i&rct=j&q=information&source=images&cd=&cad=rja&docid=OMMhuHj7TowuDM&tbnid=RZkUXpz68mk-VM:&ved=0CAUQjRw&url=http://www.123rf.com/photo_2576129_giving-information.html&ei=pV4kUdnGAcboiAfy8YCACg&bvm=bv.42661473,d.bmk&psig=AFQjCNHbVXBa_RkL1iIy5FgSQwYzFCLe_w&ust=1361424404464148


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Operational Excellence

New business models and products/services

Improved decision making

Control

Competitive advantage

Sustenance



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Optimumuse of

resources Plannedexecutionof work

timeboundcompletion

Identification ofproblems andprovision of

solutions

Identificationof gaps

Documentationof events

Verificationof theprocess of

development

Building ofdatabasefor future

evaluations

Betterprogram

management



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As we can see, from the definition, an ISconsist of the following components.


Information

System

People

Hardware

SoftwareCommunication

Networks

Data

Resources


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People:People rely, create and manage the InformationSystems.

Hardware:Variety of physical devices which constitute theInformation Systems.

Software:The set of instructions, which process theinformation.

Communication Networks: The system, through which thevarious physical devices are connected to each other.

Data Resources: The collection of information, in anorganized manner.



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Data A necessity for almost any enterprise to carry out

its business. Consists of raw facts and figures.

Information Processed form of data which convey some

message ata is first processed to information andthen used


Processing FurtherUse
http://www.google.co.in/url?sa=i&rct=j&q=information&source=images&cd=&cad=rja&docid=KSW6PoCEKec7eM&tbnid=25Zibdpof3od6M:&ved=0CAUQjRw&url=http://claritygroupinc.wordpress.com/2012/06/14/are-you-an-information-hoarder-2/&ei=AFQkUbmcOMWFiQfdsoDIBQ&psig=AFQjCNGJmYJ7TIyzzNXtCXBi7uOCku3ExQ&ust=1361421691204560http://www.google.co.in/url?sa=i&rct=j&q=what+is+data&source=images&cd=&cad=rja&docid=Qlh3BTnAiP-FYM&tbnid=MpvNtlfLbBzF-M:&ved=0CAUQjRw&url=http://blog.tunedit.org/2010/06/11/what-is-data-science/&ei=ulMkUbHrEJCTiAe_uICIDg&psig=AFQjCNF_ar7A6LhdJAPsvZtUGT26vf86lA&ust=1361421609015694


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The terms Information Systems(IS) andInformation Technology(IT) are sometimes usedinterchangeably, but there exists a differencebetween the two.

The term Information Systems(IS) describe all thecomponents and resources needed to deliver itsinformation and functions to the organization.

Whereas, Information Technology (IT) is

combinations of hardware and softwarecomponents necessary for the IS to operateeffectively.



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Computer Hardware Technologies: They consist ofmicrocomputers, midsize servers, mainframesystems, and the input, output and the storagedevices.

Computer Software Technologies: They includeoperating systems, web browsers, other software likebusiness application software such as CRM and SCM.

Telecommunication Network Technologies: Includemedia, transmitter, receiver, processors and softwareneeded for wire-based and wireless networks(internet or intranet).

Data-Resource Management Technologies: Includedatabase management system software for thedevelopment, access and maintenance of databasesof information.



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Information

Systems

Management

Challenges

Information

Technologies

Foundation

Concepts

Development

Processes

Business

Applications


For successful working of an IS, a manager should posses followingknowledge about IS


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Foundation Concepts: they talk about fundamentalbehavioral, technical, business and managerial concepts,components and roles of Information Systems, i.e. basicinformation derived from general systems theory

IT: Business Applications: They include the major uses of

Information Systems for the operations, management andcompetitive advantage of a business. Also includeapplications of IT in the functional areas of business likemarketing, manufacturing and accounting, CRM, ERP etc.

Development Processes :How business professionals andIS specialists plan, develop and implement the IS to meet

business opportunities. Management Challenges: The challenges of effectively and

ethically managing IT at all levels i.e. the end user,enterprise and global levels of business.



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Support Strategies for

Competitive Advantage

Support Business

Decision Making

Support Business Processes and

Operations



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Support Business Processes and Operations: Provides tools like: CRM, ERP, SCM etc for the efficient

functioning of the organization.

Support Decision Making: Help business enterprises in taking better decisions.

Various analysis tools like Graphs and Charts areavailable for the same.

Support Competitive Advantage: Gaining strategic advantage over competitors requires

innovative use of IT and IS.



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Functional Area IS Role/ FunctionManufacturing and Production Assembling the Product

Checking for Quality

Producing bills for materials used

Sales and Marketing Identifying CustomersMaking customer aware of the product

Selling the Product

Finance and Accounting Paying creditors

Creating financial statements

Managing cash accounts

Human Resources Hiring employees

Evaluating employees job performance

Enrolling employees in benefits plans



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A Management Information System(MIS) talks aboutthe management of Information Systems. i.e. Storing,maintaining and retrieving the information.

Management information systems involve threeprimary resources: people, technology, and

information or decision making. Management Information Systemsare distinct from

other information systems in that they are used toanalyze operational activities in the organization.

MIS analyze the performance of the organizations.

MIS is a special type of IS.



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Let us now take a closer look at the basicinformation processing activities that occur in theInformation Systems.

These activities enable the information systems

to carry out its functions/roles in theorganization smoothly.

They are: Input of data resources Processing of data into information

Output of information products Storage of data resources Control of system performance.



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Input of Data Resources: Data about business transactions and other events must

be captured and prepared by the Input Activity. Input typically takes the form of Data Entry activities. This can be done using various input devices viz.

Keyboard, Mouse, Optical Scanning Devices etc.

Processing of Data into Information: Data are typically subjected to processing activities such

as calculating, comparing, sorting, classifying andsummarizing.

These activities organize, analyze, manipulate and editthe data.

This activity converts data into information for endusers.



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Output of Information Products: Information in various forms is transmitted to end user and made available

to them in the Output activity. Common information products include messages, reports, forms.

Storage of Data Resources: Storage is the information system activity, where data is retained in the

organized manner for its use later. This is commonly done in form variety of data elements and databases.

Control of System Performance: An important activity of information system is control of its performance. An information system must produce feedback about its input, processing,

output and storage activities. This feedback should be evaluated against the standards and necessary

actions must be taken,



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Information System ActivitiesInput: Optical Scanning of bar-code tags on merchandiseProcessing: Calculating employees pay, taxes and other pay-rolldeductions and incentives.

Output:Producing reports about sales performance.Storage:Maintaining records on customers, employees and productsControl: Generating signals to indicate proper entry of sales data



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Systems fromFunctionalPerspective

Human Resource IS

Finance and Accounting IS

Brand and Public Relations IS

Sales and Marketing IS

Systems from aConstituencyPerspective

Transaction Processing System (TPS)

Management Information Systems (MIS)

Decision Support Systems (DSS)

Executive Support Systems (ESS)

Systems that spanthe organization

Enterprise Resource Planning Systems (ERP)

Supply Chain Management Systems (SCM)

Customer Relationship Management Systems (CRM)

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Operational managers keep track of the activities andtransactions taking place in the organization such assales, receipts, cash deposits, payrolls and flow ofmaterials in the factory etc.

Transaction Processing System provide informationrequired for all these tasks.

A TPS is a computerized system that performs thedaily routine transactions necessary to conductbusiness. Managers need TPS to monitor the status ofinternal operations and firms relations with externalenvironment.

It takes and gives information to other systems like:Accounts Management System, ProductionManagement System etc.

The TPS is one of the most central system in the firm.



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Middle management needs systems to help withmonitoring, controlling decision making andadministrative activities.

DSS work to support the ManagementInformation Systems. MIS summarizes and

reports on companys basic operations androutine activities using data supplied by TPS. Thisdata is supplied in form of reports to MIS by TPS.

Once the MIS receives information, DSS supportsit in non-routine decision making.

DSS not only takes information from TPS and MIS,it also takes information form external sourcessuch as current stock prices and current stockprices.



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ESS help senior and middle level management tomake decisions. They address non-routine decisions requiringjudgment, analysis and insights, as there is no pre-specified or agreed-upon procedure for arriving at asolution.

ESS also incorporates external data such as new taxlaws or data about competitors.

Besides this, they also draw summarized informationfrom the TPS and MIS.

They filter, compress and track critical data,displaying the data of importance to senior andmiddle level management as per their requirements.

They can also display the data in form of graphs.



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Executive Information Systems,

Decision Support System

ERP, SCM, CRM and other home

grown systems

Basic data and information capturing with TPS


Top Down Bottom Up


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Executive

Support

Systems

Decision

Support

Systems

Transaction

Processing

Systems

Management

Information

Systems



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Ideally the systems with a constituencyperspective are interrelated, as shown in thefigure on the previous slide.

TPS are major source of data for otherinformation systems.

ESS are primarily recipient of data from othersystems like TPS and MIS.

A DSS takes data from other systems beforedecision support, or may provide data to other

systems after a decision has been taken. As such, all the systems (TPS, MIS, ESS,

DSS)exchange data with each other.



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Enterprise Resource Planning Systems (ERP) Supply Chain Management Systems (SCM)

Customer Relationship Management Systems(CRM)

Knowledge Management Systems (KMS)



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