What is an Information System?

 An information system is the set of interrelated

components that collect, process, store and distribute
information used by/support one or more business
process.

 Input: The collection of raw data.

 Processing: The manipulation of data into
information.
 Output: Distributing valuable information.

 Also Includes both technology and people

Information System Is A System
Functions of Information Systems

E nviro nm ent
O r g a n i za ti o n
In fo r m a t i o n S y s t e m

P ro cessing
C l a s s i fy
IN P U T O U TP U T
A rrange
C alc u late

F eedback
Brief History of IS

 1950's : Electronic Data Processing/ Automatic Data

Processing
 1960's : Management Information Systems (i.e.
Report generating systems)
 1970's : Decision Support Systems (DSS), Office
Automation Systems
 1980's : Information as strategic tool, End-User
Computing, Managerial control
 1990's : Integration: Core activities + Information as
a product
Basic Components of Information Systems

 Hardware is a device such as a processor,

monitor, keyboard or printer

 Software is a program or collection of

programs that enable hardware to process
data.

 Database is a collection of related files or

tables containing data.
 Basic Components of Information
Systems (Continued)

 Network is a connecting system (wireline or wireless)

that permits different computers to share resources.

 Procedures are the set of instructions about how to

combine the above components in order to process
information and generate the desired output.

 People are those individuals who use the hardware

and software, interface with it, or uses its output.
Information System – Primary Purpose

Collects data, processes it into information then converts

information into knowledge for a specific purpose.
 Data
 Elementary description of things, events, activities, and
transactions that are recorded, classified, and stored,
but not organized to convey any specific meeting
 Information
 Data that has been organized so that they have
meaning and value to the recipient
 Knowledge
 Information that has been organized and processed to
convey understanding, experience and expertise as they
apply to a current problem or activity
Roles of IS
 Support daily tasks of line workers
 within a business function

 across business functions

 knowledge work and production work

 support effectiveness and efficiency

 Support decision making

 across management levels and functions

 individual and group

 strategic, control (e.g., scheduling, resource

allocations)
Roles of IS (continued)

 Provide feedback
 Effectiveness (e.g., conformance),
Efficiency (e.g., cost, cycle time),
Adaptability (e.g., response time)
 Between levels, between functions

 Facilitate communication
 Policyand Goals
 Coordination and direction

 Interact with environment (e.g.,

Customers, Suppliers).
 KINDS OF INFORMATION SYSTEMS

KIND OF SYSTEM GROUPS SERVED

               STRATEGIC LEVEL                                      SENIOR MANAGERS

MANAGEMENT  LEVEL                                                        MIDDLE MANAGERS

KNOWLEDGE  LEVEL                                                                               KNOWLEDGE &
DATA WORKERS

OPERATIONAL                                                                                                                  
                                                                                                                OPERATIONAL
LEVEL                                                                                                                      MANAGERS

SALES &    MANUFACTURING  FINANCE    ACCOUNTING   HUMAN
MARKETING & ENGINEERING RESOURCES
 Information System - Classification By Support Function
•5-year sales trend
•Profit Planning
•5-year budget forecasting
Senior Mgr •Product development
Executive Support System
•Sales Management
•Inventory Control
•Annual budget
Management Information System •Production Scheduling
Decision Support System •Cost Analysis
Middle Managers
•Pricing Analysis
Intelligent Support Systems
•Simulation
•Pgm coding
•System support
Knowledge Management System •Word Processing
Data Workers
Office Automation System •Desktop Publishing

•Order Processing
•Fulfillment
•Material Movement
Transaction Processing System Operational Managers •A/R, A/P, GL
•Payroll
•POS
 Four General Kinds of IS
 Operational-level systems
 support operational managers by monitoring
the day-to-day’s elementary activities and
transactions of the organization. e.g. TPS.
 Knowledge-level systems
 support knowledge and data workers in
designing products, distributing information, and
coping with paperwork in an organization. e.g.
KWS, OAS
 Management-level systems
 support the monitoring, controlling, decision-
making, and administrative activities of middle
managers. e.g. MIS, DSS
 Strategic-level systems
 support long-range planning activities of senior
management. e.g. ESS
 A Framework for IS
(with respect to support provided)

 Executive Support Systems (ESS)

 Management Information Systems (MIS)
 Decision Support Systems (DSS)
 Knowledge Work Systems (KWS)
 Office Automation Systems (OAS)
 Transaction Processing Systems (TPS)
People in organizations
 Transaction Processing Systems (TPS)
Computerized system that performs and records
the daily routine transactions necessary to
conduct the business;
These systems serve the operational level of the
organization

• TYPE: Operational-level
• INPUTS: transactions, events
• PROCESSING: updating
• OUTPUTS: detailed reports
• USERS: operations personnel, supervisors
• DECISION-MAKING: highly structured

EXAMPLE: payroll, accounts payable

A Symbolic Representation for a payroll TPS

E m p lo y e e d a ta (v a r io u s d e p a r tm e n ts ) T o g e n e r a l le d g e r : w a g e s a n d s a la r ie s

M anagem ent
P ayr o ll S yste m R e po rts

G o v e rn m e n t do cu m e n ts
P ayro ll
m aste r E m p lo y e e c h e c k s
fi l e O n -lin e
q u e r ie s
 Office Automation Systems (OAS)
Computer system, such as word processing, electronic
mail system, and scheduling system, that is designed to
increase the productivity of data workers in the office.

• TYPE: Knowledge-level
• INPUTS: documents, schedules
• PROCESSING: document
management,scheduling, communication
• OUTPUTS: documents; schedules
• USERS: clerical workers

EXAMPLE: document imaging system

 Knowledge Work Systems (KWS)
Information system that aids knowledge workers in the
creation and integration of new knowledge in the
organization.

•TYPE: Knowledge-level
• INPUTS: design specifications
• PROCESSING: modelling
• OUTPUTS: designs, graphics
• USERS: technical staff; professionals

EXAMPLE: Engineering workstations

 Decision Support Systems (DSS)
Information system at the management level of an
organization that combines data and sophisticated analytical
models or data analysis tools to support semi-structured and
unstructured decision making.

•TYPE: Management-level
• INPUTS: low volume data
• PROCESSING: simulations, analysis
• OUTPUTS: decision analysis
• USERS: professionals, staff managers
• DECISION-MAKING: semi-structured

EXAMPLE: sales region analysis

Types of Decisions
• Unstructured Decisions
• Novel, non-routine decisions requiring judgment and
insights
• Examples: Approve capital budget; decide corporate
objectives
• Structured Decisions
• Routine decisions with definite procedures
• Examples: Restock inventory; determine special offers to
customers
Types of Decisions (continued)
• Semistructured Decisions
• Only part of decision has clear-cut answers
provided by accepted procedures
• Examples: Allocate resources to managers;
develop a marketing plan
 Characteristics of Decision-Support
Systems
1. DSS offer users flexibility, adaptability, and a quick response.

2. DSS operate with little or no assistance from professional

programmers.

3. DSS provide support for decisions and problems whose solutions

cannot be specified in advance.

4. DSS use sophisticated data analysis and modelling tools.

 Management Information Systems
(MIS)

Information system at the management level of an organization

that serves the functions of planning, controlling, and decision
making by providing routine summary and exception reports.

• TYPE: Management-level
• INPUTS: high volume data
• PROCESSING: simple models
• OUTPUTS: summary reports
• USERS: middle managers
• DECISION-MAKING: structured to semi-structured

EXAMPLE: annual budgeting

Characteristics of Management Information Systems

1. Support structured decisions at the operational

and management control levels. However, they
are also useful for planning purposes of senior
management staff.
2. Its reporting and control oriented and help
provide day-to-day control of operations.
3. It rely an existing corporate data-and data flows.
4. It have little analytical capability.
5. It generally aid in decision making using past and
present data.
6. It are relatively inflexible.
7. It have an internal rather than an external
orientation.
 Executive Support Systems (ESS)

Information system at the strategic level of an organization that

address unstructured decision making through advanced
graphics and communications.

TYPE: Strategic level

• INPUTS: aggregate data; internal and external

• PROCESSING: interactive
• OUTPUTS: projections
• USERS: senior managers
• DECISION-MAKING: highly unstructured

EXAMPLE: 5 year operating plan

 Major Types of Information Systems
T Y P E S O F SY ST E M S

S tr a te g ic L e v e l S y s te m s
E SS 5 -y e a r 5 -y e a r 5 -y e a r P r o fit M anpo w e r
o p e r a tin g budg e t s a le s t r e n d p la n n in g p la n n in g
p la n fo r e c a s t in g fo r e c a s t in g

M a n a g e m e n t-L e v e l S y s te m s
S a le s In v e n to ry A nnual C a p it a l R e lo c a t io n
M IS
m anag e m e nt C o n tro l b u d g e t in g I n v e s t m e n t a n a ly s is a n a ly s is
P r ic in g /p r o fit a b ilit y C o n tra c t c o s t
D SS S a le s r e g io n P r o d u c tio n C o st
a n a ly s is a n a ly s is
a n a ly s is S c h e d u lin g a n a ly s is

K n o w le d g e - L e v e l S y s t e m s
K W S E n g in e e r in g G r a p h ic s M a n a g e r ia l
w o r k s t a t io n s w o r k s t a t io n s w o r k s t a t io n s
O A S W o rd D o cum e nt E le c t r o n ic
p r o c e s s in g I m a g in g C a le n d a r s

O p e r a tio n a l L e v e l S y s te m s
M a c h in e c o n tr o l S e c u r it ie s P a y r o ll C o m p e n s a t io n
T P S t r a d in g
O r d e r T r a c k in g P la n t s c h e d u lin g A c c o u n t s p a y a b le T r a in in g & d e v e lo p m e n t
O r d e r p r o c e s s in g M a t e r ia l m o v e m e n t C a s h A c c o u n t s r e c e iv a b le E m p lo y e e r e c o r d k e e p in g
c o n tro l m anag e m e nt

S a le s a n d M a n u fa c t u r in g F in a n c e A c c o u n t in g H um an
m a r k e t in g R e s o u rc e s
 Classification of IS
by Functional Area
 The accounting information system

 The finance information system

 The manufacturing (operations, production) information

system

 The marketing information system

 The human resources information system

 Sales & Marketing Systems
 Systems that help the firm identify customers for the
firm’s products or services, develop products and services
to meet customer’s needs, promote products and services,
sell the products and services, and provide ongoing
customer support.

EXAMPLES
System Description Organizational Level
Order processing Enter, process, and track orders Operational
Market analysis Identify customers and markets using Knowledge
data on demographics, markets,
consumer behavior, and trends
Pricing analysis Determine prices for products Management
and services
 Manufacturing and Production Systems
 Systems that deal with the planning,
development, and production of products
and services and with controlling the flow of
production.

Examples
System Description Organizational Level
Machine control Control the actions of machines Operational
and equipment
Computer-aided design (CAD) Design new products using Knowledge
the computer
Production planning Decide when and how many Management
products should be produced
Facilities location Decide where to locate new Strategic
production facilities
 Finance and Accounting Systems

 Systems that keep track of the firm’s

financial assets and fund flows.

Examples
System Description Organizational Level
Accounts receivable Track money owed the firm Operational
Portfolio analysis Design the firm's portfolio of investments Knowledge
Budgeting Prepare short-term budgets Management
Profit planning Plan long-term profits Strategic
 Human Resources Systems

 Systems that maintain employee records; Track

employee skills, job performance, and training; And
support planning for employee compensation and career
development.

Examples
System Description Organizational Level
Training and development Track employae training, skills, Operational
and performance appraisals
Career pathing Design career paths for employees Knowledge
Compensation analysis Monitor the range and distribution Management
ofemployee wages, salaries, and bene6cs
Human resources planning Plan the long-term labor force needs Strategic
of the organization
Expert System

 An expert system is a computer program that

represents and reasons with knowledge of some
specialist subject with a view to solving problems or
giving advice.

 Possess knowledge

 Specific domain

 Solving problem or giving advice

Expert Systems Features
 Expertise
 Capable of making expert level decisions

 Symbolic reasoning

 Knowledge represented symbolically

 Reasoning mechanism symbolic

 Deep knowledge
 Knowledge base contains complex knowledge

 Self-knowledge
 Able to examine own reasoning

 Explain why conclusion reached

Major Components of Expert Systems

User
Interface

Inference
Engine

Knowledge
Base
Components of Expert Systems
The Expert System
Expert
Advice User Inference
Interface Engine Knowledge
Programs Program Base

User Workstation

Expert System Development

Knowledge
Engineering
Knowledge
Acquisition
Program
Expert and/or
Workstation Knowledge Engineer
Major Components of Expert Systems

 Three major components

1. Knowledge base
 Facts
 Special heuristics to direct use of knowledge

 the software that represents the knowledge

2. Inference engine
 Brain

 Control structure

 Rule interpreter

 The reasoning mechanism that draws

conclusions (the interpreter or control

structure)
 3. User interface

•Language processor

•The hardware and software that provide the dialog between user
and the computer
Benefits of Expert Systems

 Increased outputs
 Increased productivity
 Decreased decision-making time
 Increased process and product quality
 Reduced downtime
 Capture of scarce expertise
 Flexibility
 Ease of complex equipment operation
 Elimination of expensive monitoring equipment
 Operation in hazardous environments
 Access to knowledge and help desks
Benefits of Expert Systems (contd.)
 Ability to work with incomplete, imprecise, uncertain data
 Provides training
 Enhanced problem solving and decision-making
 Rapid feedback
 Facilitate communications
 Reliable decision quality
 Ability to solve complex problems
 Ease of knowledge transfer to remote locations
 Provides intelligent capabilities to other information
systems
E.S in Business Applications
 Finance
 Insurance evaluation, credit analysis, tax planning,
financial planning and reporting, performance
evaluation
 Data processing
 Systems planning, equipment maintenance, vendor
evaluation, network management
 Marketing
 Customer-relationship management, market
analysis, product planning
 Human resources
 HR planning, performance evaluation, scheduling,
pension management, legal advising
 Manufacturing
 Production planning, quality management, product
design, equipment maintenance and repair
Limitations

 Knowledge not always readily available

 Difficult to extract expertise from humans
 Approaches vary
 Natural cognitive limitations
 Vocabulary limited
 Wrong recommendations
 Lack of end-user trust
 Knowledge subject to biases
 Systems may not be able to arrive at
conclusions