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Topic

Introduction
to Information
Systems

LEARNING OUTCOMES
By the end of this topic, you should be able to:
1.

Explain the importance of systems analysis and design and


information system;

2.

Explain the business process modelling;

3.

Identify five information system components;

4.

Identify six main categories of information system; and

5.

Differentiate four organisational levels in companies.

X INTRODUCTION
Do you know that systems analysis and design is a step-by-step process for
developing high-quality information systems? The major goal of systems analysis
and design is to improve organisational systems. Often this process involves
developing or acquiring application software and training employees to use it.
Application software, also called a system, is designed to support a specific
organisational function or process, such as inventory management, payroll or
market analysis.
The goal of application software is to turn data into information. For example,
software developed for the inventory department at a bookstore may keep track
of the number of books in stock of the latest bestseller. Software for the payroll
department may keep track of the changing pay rates of employees. A variety of
off-the-shelf application software can be purchased, including WordPerfect,
Excel and PowerPoint.

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INTRODUCTION TO INFORMATION SYSTEMS

However, off-the-shelf software may not fit the needs of a particular


organisation. Thus, the organisation must develop its own product.
Information system can be defined as a combination of information technology,
people and data. It supports business operations to increase productivity and
help managers make decisions. For example, information systems handle daily
business transactions, improve company productivity and help managers make
sound decisions. The information technology (IT) department team includes
systems analysts who plan, develop and maintain information systems. With
increasing demand for talented people, employment experts predict a shortage of
qualified applicants to fill IT positions.

1.1

MODELLING THE BUSINESS PROCESS

Many companies today use information as a basis to increase productivity,


produce quality products, provide quality services, create customer confidence
and make timely decisions.
As such, information technology has become the prime reason for the success
and failure of a company to compete in business.
This illustrates the impact of information technology on business operations
today. As a result, designing an information system of high quality is important
so that organisations can compete successfully in the global market.
Information systems experts need to understand the business operation of a
company before they can design a comprehensive system. Every business
situation is likely to be different. As an example, business transactions at a
supermarket, bank and hotel require information systems that are different and
unique.
A systems analyst applies a technique called business process modelling to
represent companys operations and information requirements. A systems
analyst works in an information technology department. This person is
responsible for planning, analysing and implementing information systems.

ACTIVITY 1.1
In your opinion, what is the impact of information technology on the
operation of an educational institution like OUM?

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1.1.1

INTRODUCTION TO INFORMATION SYSTEMS

Business Profile, Model and Process

In order to understand the operation of a certain company, a systems analyst


needs to develop a business profile and consider a number of business models.
There are two main responsibilities of the systems analyst as shown in the
following Figure 1.1.

Figure 1.1: General duties of a systems analyst

(a)

Business Profile
A business profile is an overview of a companys mission, functions,
organisation, products, services, customers, suppliers, competitors,
constraints and future direction. Although much of this information is
readily available, a systems analyst usually needs to do additional research
and fact-finding. A business profile is the starting point for the modelling
process.

(b)

Business Models
A business process is a specific set of transactions, events and results that
can be described and documented. It is basically a way of doing business. A
business process model graphically displays one or more business
processes, such as handling an airline reservation, filling a product order or
updating a customer account. Figure 1.2 illustrates an example of a
business process which is for student registration.

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INTRODUCTION TO INFORMATION SYSTEMS

Figure 1.2: Student registration's business process

The business process in Figure 1.2 has a beginning and an end, three subprocesses and a result. When a company tries to simplify operations or tries to
decrease operational cost or increase value to customers, the company is said to
be involved in business process re-engineering (BPR).

SELF-CHECK 1.1
Explain the meaning of:
(a)

Business profile;

(b)

Business model; and

(c)

Business process.

ACTIVITY 1.2
List the business process activities involved when you apply to study at
OUM (state the process, sub-process and result).

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1.2

INTRODUCTION TO INFORMATION SYSTEMS

INFORMATION SYSTEM COMPONENTS

What does it mean by a system?


A system is a set of related components which can process input to produce
a certain output.

Every system requires a form of data input. For example, an ATM machine
accepts data when you enter the PIN number. A washing machine accepts data
when you select the start button; it processes the input and produces the
respective output.
In an information system, input data consists of facts and figures, which form the
systems raw material. Information is data that has been usefully processed.
However, an information system does not only contain data and information.
There are also other elements in the system that are related and support one
another. The presence of these related elements makes information more useful 
whereby it can be made available, processed, distributed, manipulated, saved
and so on. This combination gives rise to a system, which is orderly and as such
it is called an information system.
The activity of converting data into information is called a process. An
information system contains five main components  hardware, software, data,
process and human as shown in Figure 1.3.

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INTRODUCTION TO INFORMATION SYSTEMS

Figure 1.3: Five components of an information system

1.2.1

Hardware

What does hardware mean?


Hardware is the physical embodiment of an information system. It is one of
the main elements which create the information system cycle.

Information system hardware refers to all types of hardware and the media used
for input, processing, managing, distributing and saving information that is used
in an organisation. Examples of hardware are the computers, networks,
communication equipment, scanners, digital drives and so on.
Basic hardware of a computer consists of four main elements as shown in Figure
1.4.

Figure 1.4: Four elements in the basic hardware of a computer

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INTRODUCTION TO INFORMATION SYSTEMS

Table 1.1 describes in greater detail the functions and examples of computer
hardware.
Table 1.1: Functions of Basic Hardware of a Computer
Type of
Hardware

Functions

Examples

Input

Giving data input to the system.

Keyboard, mouse, pointer, screen,


touch ball and scanner.

Processing

Operating the computer system.

Central processing unit and


memory.

Output

Can display results or output


which are generated from the
computer system.

Screen, microphone and printer.

Storage

For storing data inside the


computer.

Hard disk, floppy disk, CD-ROM


and magnetic tape.

Computers can be turned into useful tools if you know how to exploit them. To
enable computers to function more effectively and to diversify their functions,
you need the communication network to connect several computers together.
The network provides the hardware support to enable communication to be
established among each other. The communication network includes modems,
hubs, cables and other devices.

1.2.2

Software

Software falls into two categories:


(a)

System software which controls the computer and contains the operating
system and device drivers. It communicates with the hardware. It can also
modify data into a new form, prevent viruses and make copies.

(b)

Application software which contains programs that can help users and
enable companies to perform business functions. Users can increase
productivity with application software such as spreadsheets, word
processing, ordering systems and accounts receivable.

1.2.3

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INTRODUCTION TO INFORMATION SYSTEMS

Data

What does data refer to?


Data refers to the raw facts on anything or entities like student names,
courses and marks.

The raw data that has not yet been provided can be processed to become more
useful information. What does information mean?
Information is an organised, meaningful and useful interpretation of data 
such as a companys performance or a student's academic performance.
Information systems change data into information, which is useful and capable of
giving a certain meaning to its users.
Let us look at Figure 1.5 which shows an example of data and information
representation.

Figure 1.5: How data is transformed into information

Based on the example in Figure 1.6, we can understand that records inside every
attribute under the DATA item do not have any specific meaning. Every data or
record here is a raw fact. After going through processes such as addition,
ordering, combining, manipulating and so on, many kinds of information can be
produced. The information generated is not limited to a certain form. It can be
interpreted in many ways according to the needs and wills of customers.

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1.2.4

INTRODUCTION TO INFORMATION SYSTEMS

Process

What can you say to describe process? Process or procedure explains the
activities carried out by users, managers and staff. Process is important for
supporting a certain business model and is available as written documents or as
reference materials online. Processes are the building blocks of an information
system because they represent actual day-to-day business operations. So what
can we say to simplify the meaning of process?
Process is a guide consisting of orderly steps, which need to be followed and
implemented in order to get a certain decision on a certain matter.

To build a successful information system, analysts must understand business


processes and document them carefully.
The procedure for using a certain matter is very wide and important to ensure
that it can be implemented with success. All the information system components
contain management and implementation procedures on their own, and they are
different from each other.

1.2.5

Human or People

Do you know that people who have an interest in an information system are
called stakeholders? Stakeholders include the management group responsible for
the system, the users (sometimes called end users) inside and outside the
company who will interact with the system and (IT) staff members, such as
systems analysts, programmers and network administrators who develop and
support the system.

Each stakeholder group has a vital interest in the information system, but most
experienced IT professionals agree that the success or failure of a system usually
depends on whether it meets the needs of its users. For that reason, it is essential
to understand user requirements and expectations throughout the development
process.

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INTRODUCTION TO INFORMATION SYSTEMS

SELF-CHECK 1.2
1.

2.

1.3

Circle the words which are the main components of an information


system.
Hardware

Software

Network

System

Users

Purchaser

Company

Humanware

Process

Data

Information

Give two examples of data and information.

INFORMATION SYSTEM CATEGORIES

Normally there are several approaches to solve a certain problem. The same goes
for information system; there are several types of information systems which are
developed to overcome specific problems, besides trying to fulfil the user's
requests in general. In a large organisation, solving business problems such as
the management of staff salaries, processing of business data and others is
normally done with the use of large computers with internal and external
networks.
Every type of information system has a role to play. If you look at the functions
and the scope of usage, information systems can be divided into six main
categories as listed in Figure 1.6.

Figure 1.6: Six main categories of information system

To understand these six main categories of information systems, Table 1.2 gives
further explanation for each of them.

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INTRODUCTION TO INFORMATION SYSTEMS

11

Table 1.2: Information System Categories


System
Category
Transaction
Processing
System

Explanation
x Better known as TPS and is one of the first systems to be automated.
x Can access and record information about all transactions related to
the organisation.
x Transactions occur whenever there exist activities involving sales
order processing, accounts receivable, accounts payable, inventory
and ordering as well as payroll.
x These transactions involve credit and debit in the companys ledger
account.
x The output from this transaction is the account statement, which is
used to generate financial reports.
x TPS now uses the latest technology which applies the e-commerce
concept. This is a new challenge in the field of transaction processing
which is beginning to shift to the online transaction processing
system.

Management
Information
System

x This system will take the information that has been extracted from
TPS and generate reports which are required by the management for
planning and controlling a company's business.
x This system is capable of fulfilling the needs of management in
acquiring the information that:

Executive
Information
System

(a)

Is brief and useful.

(b)

Can be obtained and processed at the right time to make a


decision.

x A decision support system specifically used by the executive


management in making strategic decisions.
x It is a tool that provides online access directly to the relevant
information, in a format that is useful and can be browsed.
x Relevant information is timely, precise and useful in business
aspects, according to the interest of certain managers.
x Useful format can be browsed easily; meaning that the system has
been specially built for the use of individuals who have little time to
spare, are less skilful in using the keyboard and less experienced
with computers.

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INTRODUCTION TO INFORMATION SYSTEMS

x This system can be easily surfed so that managers can identify


strategic issues and then explore information about those issues.
x It is also an information system that combines the features of
information reporting system and decision support system. It
focuses on fulfilling the strategic information needs of the top
management.
Decision
Support
System

x The main focus of this information system is for the effectiveness of


the manager in analysing the information and making a decision.
x It is used for handling decisions that are not structured; decisions
which are made when an emergency occurs.
x This system uses a database management system, query language,
financial modelling, electronic spreadsheet, statistical analysis
program, report generator or graphic software for supplying the
information needed.

Office
Information
System

x Office automation is wider than word processing and form


processing.
x This information system covers activities in the office, which can
improve workflow and communication among workers, whether
inside or outside the office.
x The focus of this system is on the collection of information for
whoever needs it.
x The functions of this system are word processing, e-mails, work
group programming, work group scheduling, facsimile processing,
e-document, imaging and management of work flow.

Expert System

x It is a program that produces a decision which is almost similar to


decisions made by an expert in a certain discipline.
x This information system can imitate the way humans think and
consider in making a decision.
x An expert system will combine the use of knowledge, facts and
techniques to make a decision.
x An expert can always make a certain decision which is accurate as
well as ensure maximum benefit to all the people concerned.
Unfortunately, the sources of expert services are limited.
x Realising the high value of knowledge and the expertise owned by
the expert, researchers have tried to transfer and save in computers
the knowledge and expertise owned by the experts.
x Through this work, the expert system is made.

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SELF-CHECK 1.3
List the six main categories of an information system.

ACTIVITY 1.3
For each of the following problems, suggest an appropriate information
system category:
Problem

Information System Category

(a) Registration, rental and return of


videos by customers at a shop
which provides video rental
services.
(b) Determination of disease types
contracted by patients who come
to a clinic for treatment.
(c) Determining whether a staff is
qualified to be given a
scholarship for further study at a
higher level.

1.4

USERS AND INFORMATION

Corporate organisational structure has changed considerably in recent years. As


part of downsizing and business process reengineering, many companies have
reduced the number of management levels and delegated responsibility to
operational personnel. Although modern organisation charts tend to be flatter, an
organisational hierarchy still exists in most companies.
A typical organisational model identifies four organisational levels, as shown in
Figure 1.7.

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INTRODUCTION TO INFORMATION SYSTEMS

Figure 1.7: Four organisational levels


Source: Adapted from Cashman (2012)

Within the functional areas, operational personnel report to supervisors and


team leaders. The next level includes middle managers and knowledge workers,
who, in turn, report to top managers. In a corporate structure, the top managers
report to a board of directors elected by the companys shareholders.
Thus, a systems analyst must understand the companys organisational model to
recognise who is responsible for specific processes and decisions and to be aware
of what information is required by whom.

1.4.1

Top Managers

Top managers develop long-range plans, called strategic plans, which define the
companys overall mission and goals. To plot a future course, top managers ask
questions such as how much should the company invest in information
technology?, how much will Internet sales grow in the next five years? or
should the company build new factories or contract out the production
functions?
Strategic planning affects the companys future survival and growth, including
long-term IT plans. Top managers focus on the overall business enterprise and
use IT to set the companys course and direction. To develop a strategic plan, top
managers also need information from outside the company, such as economic
forecasts, technology trends, competitive threats and governmental issues.

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1.4.2

INTRODUCTION TO INFORMATION SYSTEMS

15

Middle Managers and Knowledge Workers

Just below the top management level, most companies have a layer of middle
managers and knowledge workers. Middle managers provide direction,
necessary resources and performance feedback to supervisors and team leaders.
Since they are focusing on a somewhat shorter time frame, middle managers
need more detailed information than top managers, but somewhat less than
supervisors who oversee day-to-day operations. For example, a middle manager
might review a weekly sales summary for a three-state area, whereas a local sales
team leader would need a daily report on customer sales at a single location.
In addition to middle managers, every company has people called knowledge
workers. Knowledge workers include professional staff members such as
systems analysts, programmers, accountants, researchers, trainers and human
resource specialists. Knowledge workers also use business support systems,
knowledge management systems and user productivity systems. Knowledge
workers provide support for the organisations basic functions. Just as a military
unit requires logistical support, a successful company needs knowledge workers
to carry out its mission.

1.4.3

Supervisors and Team Leaders

Supervisors, often called team leaders, oversee operational employees and carry
out day-to-day functions. They coordinate operational tasks and people, make
necessary decisions, and ensure that the right tools, materials and training are
available. Like other managers, supervisors and team leaders need decision
support information, knowledge management systems and user productivity
systems to carry out their responsibilities.

1.4.4

Operational Employees

Lastly, let us look at the fourth level which is operational employees. Operational
employees include users who rely on transaction processing systems to enter and
receive data they need to perform their jobs. In many companies, operational
users also need information to handle tasks and make decisions that were
assigned previously to supervisors. This trend, called empowerment, gives
employees more responsibility and accountability. Many companies find that
empowerment improves employee motivation and increases customer
satisfaction.

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INTRODUCTION TO INFORMATION SYSTEMS

Systems analysis and design is a step-by-step process for developing highquality information systems. The major goal of systems analysis and design is
to improve organisational systems.

On the other hand, information system is a combination of information


technology, people and data. It is important to support business operations to
increase productivity as well as help managers to make decisions.

Business process modelling is a technique used by a systems analyst to


represent companys operations and information requirements.

There are five information system components, namely human, process,


software, data and hardware.

Information system can be categorised into transaction processing system,


management information system, executive information system, decision
support system, office information system and expert system.

A typical organisational model identifies organisational levels into four


namely top managers, middle managers and knowledge workers,
supervisors and team leaders, and operational employees.

Business process modelling

Information system components

Hardware

Organisational levels

Information system categories

Software