Professional Documents
Culture Documents
Data
-Bare facts and figures
Information
-Data that is organized into meaningful context
- It is processed data
Knowledge
-Human capacity (potential & actual ability) to take effective action in varied and
uncertain situations.
-It is the awareness and understanding of facts, truths or information gained in the
form of experience or learning.
Process of Generation of Information
The components (elements) are connected together in order to facilitate the flow of
information, matter or energy.
Control
System -
Feedback
Computer Hardware
Refers to computer systems and other associated equipment including the communication links
that a modern IT installation may need.
One needs to assess the nature of IT needs, the volume of data to be processed, sources of
data, complexity of data analysis and impact of other related factors to determine the hardware
resources.
Computer Software
It is the lifeline of the IT infrastructure and it makes the computer hardware function. It is set of
interrelated computer programs.
Data
Collection of facts or events from both internal and external sources represented in the form of
symbols, such as digits, alphabets, pictures, graphs, etc.
Capturing, processing and storage of data are the essential functions.
Human Resource
They are the catalyst in process of generation of information and thus are very vital.
Procedures
It includes the operational and control procedures for the use of IT infrastructure.
It contains instructions for users regarding the use of IT infrastructure for day to day activities
and for also handling specific situations.
Roles of IS
Support Strategies
for CA
Support Business
Decision Making
Information
Systems
Operations Management
Support Support
Systems Systems
-It processes transactions in two ways – batch and real-time (or online)
-It encompasses the entire gamut of daily routines of the enterprise including financial
accounting, inventory control, payroll, sales order processing system.
-TPS s were one of the earliest computerized systems that organizations used to
capture valuable decision-making data and to conduct every day business.
-TPS are considered the backbone of many organizations without it managers couldn’t
make basic decisions such as how many items to produce?
•If a company fails to capture a transaction it may lead not only to customer
dissatisfaction and lost profit but also to serious penalties and lawsuits.
•TPS s become the source of data for other systems in the organization. If
analyzed and integrated it will give business key information about new
company plans. A better plan how to meet customer needs and preferences.
4. Data storage: to store the processed data in proper way. Otherwise data
will be usefulness to decision makers.
The kind of processing and type of storage medium are to some extent
related.
For example: magnetic tape is often used in batch processing. And
magnetic disk used in on-line processing.
Steps in Processing a Transaction
5. Output generation
– Convert data into useful format
– Different users need different formats at different times
6. Query support the last step is to query or ask system questions.
Characteristics/Features of a
Transaction Processing System
Records internal and external transactions that take place in a
company
Is used mostly by lower-level managers to make operational
decisions
Handles and stores large Volume of Data
Automation of basic operations
Benefits are easily measurable Stores data that are frequently
accessed by other systems, i.e. it acts as a source of input for
other systems
Is ideal for routine, repetitive tasks
Records transactions in batch mode or on-line
Requires six steps to process a transaction—data entry,
validation, data processing, storage, output generation, and
query support
b) Process Control System
Monitors & control physical process
Summary Report :A report that accumulates data from several transactions and
presents the results in a condensed form.
Exception Report: A report that outlines any deviations between actual output and
expected output.
- The main input to an MIS is usually the transaction processing system and other
internal company sources
Benefits of MIS:
1. Provide middle managers with information to make semistructured
decisions.
2. Information generated by an MIS helps managers understand the
day-to-day operations of the company
3. Helps managers implement the tactical goals of the company.
• MIS is a group of general-purpose, well-integrated systems that
monitor and control the internal operations of an organization.
Features
• Summary and exception Information
• Operational Control
• Focus on Internal Information
• Structured and semi-structured Decision
Relationship between a TPS and MIS
-Gives direct computer support to managers during the decision making process.
-- offers flexibility to manager to decide the input data, tool of analysis, depth of
analysis and reliance on the outcome of analysis for decision making. The users have
full control of the system.
- DSS:- A set of interactive software programs that provide managers with data, tools,
and models to make semistructured decisions.
What Why
Computers are excellent at People are excellent at
computations applying intuition & judgment
(answering what questions) to solve problems
(answering why questions)
DSS uses computer computations and put them into models that systemize
decision processes
Components of a Decision
Support System
1. Database management system (DBMS): a
piece of software that controls, manages, and
maintains internal & external data.
2. Model management system: a system that
stores and processes the models that managers
use to make decisions.
3. Support tools: tools that help users to interact
and interface with a decision support system.
Characteristics of a decision support system
Internal Data
• What-if Analysis
• Goal Seeking
Decision-making • Problem Solving
Models • Generate Alternatives
• Assess Risk
External Data
Decision Models
• Statistical Models allow user to perform a wide range of statistical
functions (average, standard deviation, graphic analysis….)
Applications of EIS
- Executive Briefing
- Personalized Analysis
- Exceptions Reporting
- Model based analysis
DSS and EIS Characteristics
• DSS and EIS provide middle and top managers with decision support.
• Both DSS and EIS are intuitive, interactive, user-friendly systems.
• DSS and EIS are menu-driven and often have excellent color and
graphic capabilities.
• Both systems use internal and external data to solve problems.
• A DSS uses internal and external data and different decision-making
models to provide managers with alternatives to a given problem. An
EIS provides managers with expert information in the form of analysis
and reports.
• Both systems are equipped with decision-making tools such as “what-
if” analysis and ‘goal seeking”. EIS is also equipped with drill-down
capabilities.
• A DSS can support both individual and group decision making. DSS
that support group decision making are known as group decision
support systems (GDSS).
Artificial Intelligence (AI) and
Expert Systems (ES)
• Artificial intelligence is a field of computer science that
studies the design and development of computer
systems that mimic human intelligence.
• Intelligence defined as a set of characteristics or
attributes.
• AI includes several areas of specialization such as
1. Computer vision: the computers ability to recognize &
identify objects.
2. Speech recognition: the computers ability to understand
a human voice.
3. Natural language:the ability to communicate with a
computer the way the humans communicate with each
other.
4. Robots: machines capable of human like movement.
Expert System
One of the AI fields is Expert System (ES)
• Expert systems are computer programs that capture the
knowledge of a human expert and use it to solve complex
problems.
• Knowledge appears in different forms in an organization
such as an innovative ideas for a products, a new way to
motivate employees, a new production method…..
• The main goal of ES is to capture knowledge of experts in
all forms and use it to solve complex problems of an
organization in a relatively narrow domain.
• ES then are versatile and can help with many kinds of
problems.
• It attempts to represent knowledge of human experts in the
form of heursitics.
Components of an Expert
System
• ES can capture and apply the knowledge of human expert by joining
three main components:
1. Knowledge base
2. Inference engine
3. User interface
Knowledge representation
• The process of representing the knowledge of experts in a
language that the computer can understand.
• There are different approaches to knowledge representation
on of the most popular ways to represent knowledge is using
IF – THEN rules.
• Expert system that use IF-THEN rules are called rule based
systems.
Example IF car lights were left on AND car doesn't start
THEN the battery is dead (99%)
Knowledge Base
Human Books others
experts
Knowledge acquisition
Knowledge representation
Knowledge Base
2.Inference engine
• The inference engine is similar to the reasoning of the
human brain.two popular reasoning possesses that an
expert system uses:
1. Forward chaining 2.backward chaining
In forward chaining, the inference engine begins with a
set of known facts, analyze the data and looks for
solutions that match the data set.
In backward chaining, the inference engine begins with
a goal and search for data, facts, and other evidence that
support this goal.
Inference engine:a component of expert system that perform
a reasoning function that results in advice to the user.
forward chaining
Rule 3
Data start Rule 1
Rule 2 Rule 4 Goal End
Rule 3
Rule 1 Data End
Goal start Rule 4 Rule 2
backward chaining
3.User interface
• User interface combines the knowledge
base & inference engine in a way that
makes it easy for the user to interact with
the system.
Characteristics of an Expert
System
• An expert system is a software program that captures
the knowledge and problem-solving skills of a human
expert.
• Expert systems are ideally suited for problems that
require knowledge, intuition, and judgment.
• Expert systems, unlike DSS and EIS, can replace the
decision maker.
• The three main components in an expert system are
the knowledge base, the inference engine, and the
user interface.
Benefits of an Expert System
- Coding of expertise
- Enhanced understanding of business process
- Timely availability of expertise
- Easy replication
- Strategic Application
Limitations
- Limited Focus
- Inability to learn
- Maintenance problems and developmental costs
- Limited domain of knowledge
Types of Information Systems and Levels of Management
EIS
Office
Top
Automation DSS
Middle
Systems MIS
Lower TPS
Expert Systems
Knowledge Management Systems
-Used for managing knowledge in organization, supporting creation, capture, storage
and dissemination of information
Create Capture
KMS Cycle
Knowledge Refine
Benefits
-Sharing of valuable organizational information
- reducing redundant work
- reducing training time for new employees
IS for Strategic Advantage
* Focused differentiation: Competitive strategy for developing new market niches for
specialized products or services where a business can compete in the target area better
than its competitors. Information systems enable companies to finely analyze customer
buying patterns, tastes, and preferences so that they efficiently pitch advertising and
marketing campaigns to smaller and smaller target markets.
• Value chain model: Model that highlights the primary or support activities that add
a margin of value to a firm’s products or services where information systems can
best be applied to achieve a competitive advantage.
• Primary activities are most directly related to the production and distribution of the
firm’s products and services that create value for the customer Primary activities
include inbound logistics, operations, outbound logistics, sales and
marketing, and service.
To manage the supply chain, a company tries to eliminate delays and cut the amount
of resources tied up along the way.
PROCUREMENT
ACCOUNTING INTRANET
PRODUCTION
LOGISTICS
SHIPPING INVENTORY DISTRIBUTORS
SERVICES
FIRM LEVEL STRATEGY & IT
• “How and when should we compete as opposed to cooperate with others in the
industry?”
• Firms can cooperate to develop industry standards in a number of areas; they can
cooperate by working together to build customer awareness, and to work collectively
with suppliers to lower costs.
• Information partnership: Cooperative alliance formed between two corporations for
the purpose of sharing information to gain strategic advantage.
• Such partnerships help firms gain access to new customers, creating new opportunities
for cross-selling and targeting products. They can share investments in computer
hardware and software.
• At industry level, two analytic models are used: the competitive forces model and
network economics.
• Competitive forces model: Model used to describe the interaction of external
influences, specifically threats and opportunities, that affect an organization’s strategy
and ability to compete.
• Network economics: Model based on the concept of a network where adding another
participant entails zero marginal costs but can create much larger marginal gain. Used
as a model for strategic systems at the industry level.
COMPETITIVE FORCES MODEL
Business can counter the threats of competitive forces by implementing five basic
strategies-