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Information System
Information System
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2.1 Information
Information can be defined as the data which is organized and presented at a time and
place so that the decision maker may take necessary action. Information in other wards
is the result/product of processing data.
Data
Process
Information
Decision
Specific
Action
2.2 Different types of information
a. Environmental information
i.
Government policies
ii.
Economic trends
iii.
Technological environment
iv.
Factors of production
b. Competitive information
c.
i.
Industry demand
ii.
Firm demand
iii.
Competition
iv.
Past performance
v.
Present activity
vi.
Future plans
Internal information
i.
Sales forecast
ii.
Financial plan
iii.
Supply factors
iv.
Policies
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Information is power:
Systems are diverse in nature like economic system, computer system, decision
support system, communication system, transport system, educational systems. This
means use live in an era of systems.
A system is composed with set of interrelated components which has a clearly
defined boundary and working together to achieve a common set of objectives by
accepting inputs and producing outputs in an organized transformation process. The
simple system is shown in figure 1.1.
The figure 1.1 shows the system has a set of elements like input, processing, output,
feedback and control element. The output of the system is subjected to variations and
will pass to the notice of input and processing stage to initiate corrective actions. The
feedback element will do this job. A control element will exercise the control over the
elements of the system to take care of feedback. Such a system is called closed loop or
cybernetic system which has two important characteristics. One is self monitoring and
other is self regulation to maintain the system objectives.
Thus a system is a group of elements or components joined together to fulfill
certain functions. A system is an assemblage of procedures, processes, methods,
routine techniques.
A system is made up of sub systems. These subsystems may be composed of further
subsystems.
Various types of systems
Systems
Sub-systems
Transport
Air
transport,
Usefulness
rail
transport,
transport
Computer
Business
Various
for
information
departments like
data
4 Information system
An information system has a set of interrelated components that collect (or retrieve),
process, store, and distribute information to support decision making and control in an
organization. An information system has an organized combination of People, Hardware
and Software, Communication networks, Data resources and Policies and procedures.
Therefore, information system is stores, retrieves, transforms, and disseminates
information in an organization. The simple information system is shown in figure 1.2.The
Information System transforms the input of data resources into an output of information
and its products. The processed data as information shall be stored for further uses.
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ii)
iii)
Support strategies
for
Supportcompetitive
Business Decisions.
advantages
Support Business Process and Operations: information system support the Business
Process and Operations of an organization. For an example even a small medical retail
shop today depends on an information system. As the consumer enquires the medicine
to buy, the retailer would log into the information systems to see the availability of the
medicine, to know the cost and billing of the medicine. Therefore every business
transactions and business process need the support of the information systems.
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Three important reasons why IT makes a difference to the success of a business are
mentioned below.
1. Foundation of doing business
2. Productivity
3. Strategic opportunity and advantage
require
changes
in
hardware,
software,
databases,
and
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7.2. Productivity
IT is one of the most important tools managers uses to have increase productivity and
efficiency of businesses. IT is a major factor in reducing costs. For firms, IT is a major
source of labor and capital efficiency.
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Further, Strategic Opportunity and Advantage may be viewed with following points.
New Business Models: Dell Computer has built its competitive advantage on an IT
enabled build-to-order business model that other firms have not been able to imitate.
Create new services: IT makes it possible to develop Create and develop new
services. E.g. E Bay has developed the largest auction trading platform for millions
of individuals and businesses.
Differentiate the organization from the competitors: IT and its innovation may be
adopted as uniqueness in their business to differentiate the organization from the
competitors. Amazon has become the largest book retailer in the United States on
the strength of its huge online inventory and recommender system. Amazon, eBay,
Dell, Wal-Mart and Apple's iTunes are just a few firms that have built and maintained
technology-based advantages.
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continue to be a flat form to do the business. The Internet is making many traditional
business models obsolete.
8.2 Transformation of Business Enterprises.
Along with rapid changes in markets and competitive advantages are changes in the
firm themselves. The internet and new markets are changing the cost and revenue
structure of the traditional firms and are hastening the demise of traditional business
models. In addition to the above some more transformations are also caused due to the
technological convergence in the traditional business in terms of its structure,
management, technology adoption etc. These transformations are presented in the
encapsulated manner below.
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Location independence
Empowerment
8.3 Globalization
Globalization results various organizations to distribute core business functions in
product design, manufacturing, finance and customer supports to locations in other
countries where the work may be performed cost effectively. The Globalization leads
the management and control in a global marketplace, competition in world markets,
global workgroups and global delivery systems which essentially based on digital
technology.
8.4 Rise of the Information Economy
Todays country economy is not only dependent on manufacturing sectors business but
also on Knowledge and information-based products. Knowledge and information
provides more value the new products and services. In Knowledge and informationbased economies, the firms capability and market value will be assessed on new
products and services launched by the firm and firms Knowledge as a central
productive and strategic asset.
8.5 The Emerging Digital Firm
A digital firm is one in which nearly all of the organisations significant business
relationships with customers, suppliers and employees are digitally enabled and
mediated. Core business which involve set of logically related tasks and behaviours that
organisations develop over time to produce specific business results and the unique
manner are organised and coordinated. Core processes are accomplished through
digital networks spanning the entire organisation or linking multiple organisations. In a
digital firm, any piece of information required to support key business decisions is
available at any time and any where in the firm. Key Corporate Assets of digital firm are
Intellectual property, core competencies, and financial and human assets are
managed through digital means. A frame work of Digital Firm is presented in Figure
1.8.
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Attributes
Requirements
Timeliness
Currency
Frequency
Time Period
Information should be provided about past, present, and future time periods
Accuracy
Relevance
Completeness
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Conciseness
Scope
Performance
Clarity
Detail
Order
Presentation.
Media
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(or
retrieve), process, store, and distribute information to support decision making and
control in an organization. Information System Stores, retrieves, transforms, and
disseminates information in an organization.
10.2 Computer-Based Information Systems (CBIS)
Earlier days there was a usage of manual information system which essentially depend
on the human skills and intellectual capabilities of individuals. Unlike manual information
system, Computer-Based Information System has fixed definitions of data and
procedures. Computer-Based Information System (CBIS) rely on computer hardware
and software and performs processing operations as defined by the pre established set
of procedures, and sequences of instructions and thus disseminate the information to
the organization or to end users.
10.3 Business perspectives of Information Systems
Following points are worth to note under the view of Business Perspective on
Information Systems.
Information
Systems
based
on
information
technology
require
significant
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Operational level people make daily, routine and programmed decisions which do not
significantly affect the organizations strategic growth, while middle level management
people will take tactical decisions and top level personnel shall take strategic decisions
which will affect the organizations performance in the long range. Table 1.3 shows
some examples of three kinds levels and associated objectives and decisions.
Table 1.4 shows some examples of different functions of the organizations and
associated Operations, Tactics, Strategy Decisions.
Description
Example
Type of Information
External
will
sales,
Long-term outlook.
industry.
trends.
Expenses,
costs or improve
Level
Strategic
Tactical
Competitive
advantage,
change
the
events,
costs
rivals,
quality,
schedules,
efficiency.
Operations
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Scheduling
Transactions, accounting,
employees,
human
ordering supplies.
management, inventory.
resource
Table 1.4 Examples of functions and associated Operations, Tactics, Strategy Decisions.
Sector
Production
Accounting
Marketing
Operations
Tactics
Strategy
Machine settings
New factory
Worker schedules
New products
Maintenance sch.
New industry
Categorize assets
Inventory valuation
Assign expenses
Depreciation method
Produce reports
International taxes
Reward salespeople
Determine pricing
Monitor competitors
Survey customers
Promotional campaigns
New products
Monitor promotions
New markets
Senior management makes long-range strategic decisions and ensures the firm's
financial performance. Middle management carries out the plans of senior management
and operational management monitors the firm's daily activities. Knowledge workers
such as engineers and scientists design products and create and distribute new
knowledge for the organization. Data workers such as secretaries process the
organization's paperwork. Production or service workers produce the products or
services.
Experts are employed for the major business functions: the specialized tasks
performed by organizations, which consist of sales and marketing, manufacturing and
production, finance and accounting, and human resources.
An organization coordinates work through its hierarchy and business
processes. These processes may be documented and formal. Each organization has a
unique culture, or fundamental set of assumptions, values, and ways of doing things,
that are accepted by most of its members. Part of an organization's culture can be found
in its information systems.
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Information system may also reflect the organizational politics or conflicts that
result from differing views and opinions in an organization. Information systems are also
a key component in the ability of management to make sense of the challenges facing a
company and in management's ability to create new products and services. Information
technology is one of the tools managers use to cope with changes.
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factors,
such
as
customers,
suppliers,
competitors,
stockholders, and regulatory agencies, interact with the organization and its
information systems.
4. Functions of an Information System is presented in figure 1.22
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Recommended Books
1. Management Information Systems, Kenneth J Laudon, Jane P. Laudon, Pearson/PHI,10/e,
2. Management Information Systems, James A. O Brien, Tata McGraw Hill, 7th Edition, 2007.
3. Management Information Systems, W. S. Jawadekar, Tata McGraw Hill Edition, 3/e, 2007
Reference Books
1.
2. Management Information Systems, Effy Oz, Thomson Course Technology, 3/e, 2003
3. Corporate Information Strategy and Management, Lynda M AppleGate, Robert D Austin et al,
Tata McGraw Hill, 7th Edition.
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