INFORMATION SYSTEM

Learning Objectives

Explain who uses information systems in a typical organization.

Understand what information systems are. Identify several types of information

systems commonly found in organizations and describe their purpose.

Key Issues 6 Departments (Horizontal flow) 3 Management Levels (Vertical flow) Computer Based Information System (CBIS)

How are organizations structured? Information whether computer-based or

not – has to flow within an organization in a way that will help managers, and the organization, achieve their goals.

To this end, organizations are often structured horizontally and vertically.Horizontally to reflect functionsVertically to reflect management levels

Organized by Department/FunctionMost Organizations have departments that perform 6 functions.

1. Research and Development (R&D)○ Conduct basic research, relating organization’s current or new

products.○ It does product development and tests and modifies new products or

services

2. Production (Manufacturing)○ Makes the product or provides the services.○ Takes the raw materials and turn them into finished goods.

3. Marketing and Sales○ Oversees advertising, promotion, and sales○ Plan , price , advertise, promote, package and distribute the services

or goods to customers

4. Accounting and Finance Handle all finance matters such as cash management, pays bills

and taxes, issues paychecks, records payments, make investment, make financial report.

5. Human Resources (Personnel) Handle with personnel matters Hire people, administer sick leave and retirement, compensation

level, professional development, employee relation, government regulations.

6. Information Systems (IS) Manage the organization’s computer-based systems and plans for

and purchases new ones.

Management Level

Organized by Management Level

ExecutiveLevel

Middle Level

Operational Level

Managers are usually classified into 3 categories: executive, middle, and operational.

These positions are often pictured as a pyramid to illustrate their usual ratio and hierarchical ranking With executive managers fewer in number and at the top of

the pyramid Operational managers greater in number and at the bottom

of the pyramid. Middle managers usually fall between the other two types of

managers, although with the increased use of information systems and other technological advances, the middle-management level is becoming less essential and has begun to disappear in some organizations. This trend is referred to as the flattening of the organizational structure.

Management Levels

Management levels are reflected in the organization chart.

An organization chart is a schematic drawing showing the hierarchy of formal relationships among an organization’s employees.

Managers on each of the three levels have different levels of responsibility and are required to make different kinds of decisions.

What are the characteristics for each level?

Operational Level

Operational Level (Lower Manager)

Where the routine day-to-day interaction with customers occurs

Dealing with Supervising and Controlling Information system

Automates repetitive activitiesImproves efficiency of the customer interface

Decisions Repetitive

Operational Level

ExecutiveLevel

Managerial Level

Operational Level

Who: Foremen or Supervisors

What: Automate routine andrepetitive activities and

events

Why IS: Improve OrganizationalEfficiency

Middle Level

Managerial Level (Middle Manager)

Where functional managers monitor operations

Dealing with Organizing and Staffing Information system

Provides summary information of operational activities

Decisions Moderately complexTime horizon up to a few years

Managerial Level

ExecutiveLevel

Managerial Level

Operational Level

Who: Mid-level Managers andFunctional Managers

What: Automate the Monitoring andControlling of Operational

Activities

Why IS: Improve OrganizationalEffectiveness

Executive Level

Executive Level (Top Manager)

Where long-term strategic issues are decided

Dealing with Planning Information systems

Aggregate summariesStatistical analyses, trends, and projections

Decisions Very complex Long-term ramifications

Top Level Title

CEO Chief Executive Officer

President

CFO Chief financial officer Vice president

COO Chief operating officer Vice president

CIO Chief information officer

Vice president

Executive Level

ExecutiveLevel

Managerial Level

Operational Level

Who: Executive-level ManagersCEO, CIO, CFO, COO

What: Aggregate Summaries of PastOrganizational Data andProjections of the Future

Why IS: Improve OrganizationalStrategy and Planning

Who Uses Information Systems?

Executive managers: strategic decisions

Middle managers: tactical decisions

Operational managers: operational decisions geared toward meeting short-term objectives

Nonmanagement workers: on-the-job decisions

COMPUTER BASED INFORMATION

SYSTEM (CBIS)

What Is an Information System?

Information system: system used to generate information to support users in an organization.

It is a collection of people, hardware, software, data, and procedures that interact to generate information to support users in an organization.

In the early days of commercial computing, businesses purchased computers almost exclusively to perform routine processing tasks related to business transactions, such as processing orders and payments. Used in this manner, the computers cut clerical expenses

considerably As time passed, it became apparent that the computer

could do much more than just transaction processing – it could also provide information to assist managers in their decision making role. As data analysis tools and information systems continue to

improve such as the data mining tools and the powerful business analytics tools – they are becoming and increasingly important and valuable business component.

By using information systems, managers spend less time gathering facts but have access to more information when making their decisions.As a result, managers have more time to do

the things they do best – thinking creatively and interacting with people.

Types of Information Systems

Transaction Processing Systems (TPS) Decision Support Systems (DSS) Executive Information Systems (EIS) Office Automation (OA)Artificial Intelligence (AI)

Transaction Processing Systems (TPS)

Transactions: events that occur as a regular part of business day-to-day operations

TPS

It is a computer-based information system that keeps track of the transactions needed to conduct business.

Activities of TPS

A transaction includes everything concerning the product or service in which the organization is engaged:Production, distribution, sales, orders.Material purchased, employees hired, taxes

paid, payroll processing, sales, and so on.

EX

Point of Sale Stock Sale report

DSS

DSS

It is a computer-based information system that support decision making.EX: A bank loan officer verifying the credit of a

loan applicant.

EX: airlines developed a DSS, the yield management system, that helps managers decide how much to overbook and how to set prices for each seat so that a plane is filled and profits are maximized.

EX: investors in comercial real estate use a DSS to forecast property values up to 40 years into the future, based on income, expense, and cash-flow projections.

Executive Information System (EIS)

EIS

An executive support system (ESS) An executive information system (EIS) It is a special type of DSS specifically

targeted to upper management. It is an easy-to-use DSS made

especially for strategic managers and specifically supports strategic decision making.

It is a type of management information system intended to facilitate and support the information and decision making needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization.

It is commonly considered as a specialized form of a Decision Support System (DSS).

Activities of EIS

Executive-level decision-making Structuring or modifying business plans and

strategies Monitoring internal and external events, and

resources Economic trends studying and research Business forecasting Crisis management Staffing and labor relations

OAS

Office Automation System It combines various technologies to

reduce the manual labor required in operating an efficient office environment and to increase productivity.

Office Automation System

Develop documents Word processing

Desktop publishing

Schedule resources Electronic calendars

Communicate Electronic and voice mail

Fax

Video conferencing

Groupware

Artificial Intelligence (AI)

AI

Artificial intelligence (AI), a group of related technologies used for developing machines to emulate human qualities, such as learning, reasoning, communicating, seeing, and hearing.

Today there are main areas of AI:

(1) expert systems,

(2) natural language processing,

(3) pattern recognition,

(4) intelligent agents,

(5) virtual reality and simulation devices,

(6) robotics.

Expert System An expert system, or knowledge-based

system, is a set of interactive computer programs that helps users solve problems that would otherwise require the assistance of a human expert.

Expert systems are created on the basis of knowledge collected on specific topics from human specialists, and they imitate the reasoning process of a human being.

Ex: Medical diagnosis

Natural language processing Natural language processing is the study

of ways for computers to recognize and understand human language, whether in spoken or written form.Natural languages are ordinary human

languages, such as English.Major advances in natural language

processing have occurred in speech recognition, in which computers translate spoken speech into text.

Pattern Recognition

It involves a camera and software that identify recurring patterns in what they are seeing and recognize the connections between the perceived patterns and similar patterns stored in a database.Such as facial-recognition software allows

computers to identify faces.Video surveillance cameras have been used

to pick out suspicious individual in crowds.Robot vision

Intelligent Agent

How do you find information in the vast sea of the internet?As one solution, computer scientists have

been developing so-called intelligent agent is a form of software with built-in intelligence that monitors work patterns, asks questions, and performs work tasks on your behalf.

EX: shopping robots used in online shopping. Also known as bots or network agents, these search the internet and online databases for information and bring the results back to you.

Virtual Reality (VR) It is a computer-generated artificial reality,

projects a person into a sensation of three-dimensional space.

It enables you To see three-dimensionality.to hear sounds not only near each ear but also in

various places all around you.The glove has sensors for collecting data about your

hand movements.Once you are wearing this equipment, software gives

you interactive sensory feelings similar to real-world experiences.

Simulator It is device that represent the behavior of

physical or abstract systems.Virtual-reality simulation technologies are applied

a great deal in training.For instance, to train bus drivers, they create

lifelike bus control panels and various scenarios such as icy road conditions.

They are used to train pilots on various aircraft and to prepare air-traffic controllers for equipment failures.

Architects create virtual walkthroughs of the structures they are designing.

Robotics

Robotics is the development and study of machines that can perform work that is normally done by people.

Robots are also used for more exotic purposes such as doing inspections and cleanups, checking for land mines.