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Chapter 1.

Introduction to information system

Definition of IS

• An ISA is a “conceptual blueprint or plan that expresses the desired future structure for
information systems in an organization”

• It provides a “context within which managers throughout the organization can make
consistent decisions concerning their information systems”

• Benefits of ISA:

• “Provides a basis for strategic planning of IS

• Provides a basis for communicating with top management and a context for
budget decisions concerning IS

• Provides a unifying concept for the various stakeholders in information systems.

• Communicates the overall direction for information technology and a context for
decisions in this area

• Helps achieve information integration when systems are distributed (increasing

important in a global economy)

• Provides a basis for evaluating technology options (for example, downsizing and
distributed processing)”


The word information is used commonly in our day to day working. In MIS, information has a
precise meaning and it is different from data. The information has a value in decision making
while data does not have. Information brings clarity and creates an intelligent human response in
the mind. In MIS a clear distinction is made between data and information. Data is like raw
materials while the information is equivalent to the finished goods produced after processing the
raw material.

Information has certain characteristics.

1) Information Improves representation of an entity

2) Updates the level of knowledge.
3) Has a surprise value.
4) Reduces uncertainty.
5) Aids in decision making.
6) The quality of information could be called good or bad depending on the mix of these
characteristics. Devis and Olson defines information as a data that has been processed
into a form that is meaningful to the recipient and is of real or perceived value in the
current or the prospective actions or decisions of the recipient. Data is defined as groups
of non-random symbols in the form of text, images or voice representing quantities,
actions and objects. Whether an entity is a data or information, it must be transferred
through communication from the Source. to the Destination without loss of content. The
general model for such communication is given in Fig. The above model of
communication is used in the MIS. The MIS is equivalent to the transmitter which
provides information and sends through reports (channel) to the various receivers, which
is decoded or interpreted by the receiver at the destination. The poor quality of
information due to various factors would create confusion and misunderstanding, which
is equivalent to a Noise and a Destortion in the communication model. A good MIS
communicates the information without a noise and a distortion to the user.

Characteristics of Information :

The parameters of a good quality are difficult to determine, however, the information can be
termed as of a good quality if it meets the norms of impartiality, validity, reliability, consistency
and age. The quality of information has another dimension of utility from the users point of view.
The users being many, this is difficult to control. Therefore, if one can develop information with
due regards to these parameters, one can easily control the outgoing quality of the information
with the probable exception of the satisfaction at the users end. Following are the essential
characteristic features :

(i) Timeliness : Timeliness means that information must reach the recipients within the
prescribed timeframes. For effective decision-making, information must reach the
decision-maker at the right time, i.e. recipients must get information when they need
it. Delays destroys the value of information. The characteristic of timeliness, to be
effective, should also include up-to-date, i.e. current information.
(ii) Accuracy : Information should be accurate. It means that information should be free
from mistakes, errors & clear Accuracy also means that the information is free from
bias. Wrong information given to management would result in wrong decisions. As
managers decisions are based on the information supplied in MIS reports, all
managers need accurate information.
(iii) Relevance : Information is said to be relevant if it answers especially for the recipient
what, why, where, when, who and why? In other words, the MIS should serve reports
to managers which is useful and the information helps them to make decisions.
(iv) Adequacy : Adequacy means information must be sufficient in quantity, i.e. MIS
must provide reports containing information which is required in the deciding
processes of decision-making. The report should not give inadequate or for that
matter, more than adequate information, which may create a difficult situation for the
decision-maker. Whereas inadequacy of information leads to crises, information
overload results in chaos.
(v) Completeness : The information which is given to a manager must be complete and
should meet all his needs. Incomplete information may result in wrong decisions and
thus may prove costly to the organization.
(vi) Explicitness : A report is said to be of good quality if it does not require further
analysis by the recipients for decision making.
(vii) Impartiality: Impartial information contains no bias and has been collected without
any distorted view of the situation. The partiality creeps in, if the data is collected
with a preconceived view, a prejudice, and a pre-determined objective or a certain
(viii) Validity: The validity of the information relates to the purpose of the information. In
other words, it is the answer to the question-dose the information meet the purpose of
decision making for which it is being collected? The validity also depends on how the
information is used. Since the information and the purpose need not have one to one
correspondence, the tendency to use it in a particular situation may make the
information invalid. For example, if the quality of the manufactured product is
deteriorating and it is decided to select the causes of poor quality, then one must
collect all the possible causes which may affect the quality. Quality is a function of
the raw material, the process of manufacture, the tools applied, the measures of the
quality assessment, the attitude of the people towards the control of quality. However,
if the information collected talks only about raw materials and the process of
manufacture, then this information is not sufficient and hence it is not valid for all the
decisions which are required to control the quality.
(ix) Reliability: It is connected to the representation and the accuracy of what is being
described. For example, if the organization collects the information on the product
acceptance in the selected market segment, the size of the sample and the method of
selection of the sample will decide the reliability. If the sample is small, the
information may not give the correct and a complete picture and hence it is not
reliable. The reliability is also affected from the right source.
(x) Consistency: The information is termed as inconsistent if it is derived from a data
which does not have a consistent pattern of period. Somewhere, the information must
relate to a consistent base or a pattern. For example, you have collected the
information on the quantity of production for the last twelve months to fix the
production norms. If in this twelve months period, the factory has worked with
variable shift production, the production statistics of the twelve months for
comparison is inconsistent due to per shift production. The consistency can be
brought in by rationalizing the data to per shift production per month. The regularity
in providing the information also helps in assessing the consistency in the
(xi) Age: If the information is old, it is not useful today. The currency of the information
makes all the difference to the users. If the information is old then it does not meet
any characteristics of the information viz., the update of knowledge, the element of
surprise and the reduction of uncertainty, and the representation. Maintaining these
parameters at a high degree always poses a number of problems. These problems are
in the management of the operations, the sources, the data processing and the systems
in the organization. A failure to maintain the parameters to a high degree affects the
value of the information to the decision maker.

Different types of Information

Classification of Information :

The information can be classified in a number of ways provide to better understanding. Jhon
Dearden of Harvard University classifies information in the following manner :

(1) Action Verses No-Action Information : The information which induces action is called action
information. ‘No stock‘report calling a purchase action is an action information. The information
which communicates only the status is No-Action Information. The stock balance is no-action

(2) Recurring Verses No-Recurring Information : The information generated at regular intervals
is recurring information. The monthly sales reports, the stock statement, the trial balance, etc are
recurring information. The financial analysis or the report on the market research study is
norecurring information.

(3) Internal and external information : The information generated through the internal sources of
the organization is termed as Internal Information, while the information generated through the
govt. reports, the industry survey etc., termed as External Information, as the sources of the data
are outside the organization. The information can also be classified, in terms of its application :
(i) Planning Information : Certain standard norms and specifications are used in planning of any
activity. Hence such information is called the Planning Information. e. g. Time standard, design

(ii) Control Information : Reporting the status of an activity through a feedback mechanism is
called the Controlling Information. When such information shows a deviation from the goal or
the objective, it will induce a decision or an action leading to control.

(iii) Knowledge Information : A collection of information through the library records and the
research studies to build up a knowledge base as an information is known as Knowledge
(iv)Organization Information : When the information is used by everybody in the organization, it
is called Organization Information. Employee and payroll Information is used by a number of
people in an organization.

(v) Functional/ Operational Information : When the information is used in the operation of a
business it is called Functional/Operational Information.

(vi) Database Information : When the information has multiple use and application, it is called as
database information. Material specification or supplier information is stored for multiple users.

Information system Architecture

• Zachman ISA Framework components

• Data - The “What” of the information system
• Process - The “How” of the information system
• Network - The “Where” of the information system
• People - Who performs processes and are the source and receiver of data and
• Events and Points in time - When processes are performed
• Reasons - Why: For events and rules that govern processing
• Six roles or perspectives of the Data, Process and Network components
• Business scope (Owner)
• Business model (Architect)
• Information systems model (Designer)
• Technology model (Builder)
• Technology definition (Contractor)
• Information system (User)
Types of Information Systems
1. Transaction Processing Systems
A transaction processing system provides a way to collect, process, store, display modify or
cancel transactions. Most of these systems allow multiple transactions to take place
simultaneously. The data that this system collects is usually stored in databases which can be
used to produce reports such as billing, wages, inventory summaries, manufacturing schedules,
or check registers.
2. Management Information Systems
A management information system is an information system that uses the data collected by the
transaction processing system and uses this data to create reports in a way that managers can use
it to make routine business decisions in response to problems. Some of the reports that this
information system creates are summary, exception and ad hoc reports. All this is done to
increase the efficiency of managerial activity.
3. Decision Support Systems
A decision support system helps make decisions by working and analyzing data that can
generate statistical projections and data models. This system gives support rather than replacing a
managers judgement while improving the quality of a managers decision. A DSS helps solve
problems while using external data.
4. Expert Systems and Neutral Networks
An expert system, also known as a knowledge-based system, is a computer system that is
designed to analyze data and produce recommendations, diagnosis and decisions that are
controlled. A neutral system uses computers to foster the way a human brain may process
information, learn and remember that information.
5. Information Systems in Organizations
This information system collects, stores and processes data to give an organization real time
useful and accurate information. This information system encompasses data gathering
information from the people and machines that collect, process, output and store data. Also in the
networks that transmit and receive data and the procedures that govern the way data is handled.

Difference between Data Processing and Information Processing

Data Processing : Data Processing is a process that converts data into information or
knowledge. The processing is usually assumed to be automated and running on a computer.
Because data are most useful when well-presented and actually informative, data-processing
systems are often referred to as information systems to emphasize their practicality.
Nevertheless, both terms are roughly synonymous, performing similar conversions; data-
processing systems typically manipulate raw data into information, and likewise information
systems typically take raw data as input to produce information as output. Data processing is that
a business has collected numerous data concerning an aspect of its operations and that this
multitude of data must be presented in meaningful, easy-to-access presentations for the managers
who must then use that information to increase revenue or to decrease cost. That conversion and
presentation of data as information is typically performed by a data-processing application.

Information Processing : Information processing is the change or processing of information in

any manner detectable by an observer. Information processing may more specifically be defined
in terms by Claude E. Shannon as the conversion of latent information into manifest information.
Latent and manifest information is defined through the terms of equivocation, remaining
uncertainty, what value the sender has actually chosen, dissipation uncertainty of the sender what
the receiver has actually received and transformation saved effort of questioning - equivocation
minus dissipation. Practical Information Processing can be described as a cycle, where data
which may have no inherent meaning to the observer is converted into information, which does
have meaning to the observer.
MIS and other academic disciplines:
• Managerial accounting
• Operation research
• Management and organization theory
• Computer science

Pyramid structure of MIS

Two approaches of defining the subsystems of an MIS are :
• According to the organizational functions which they support
• According to managerial activities for which they are used.
Major Functional subsystem Some typical uses
Marketing Sales forecasting, sales planning, customer
and sales analysis
Manufacturing Production planning and scheduling, cost control
Logistics Planning and control of purchasing, inventories,
Personnel Planning personnel requirements, analyzing
performance, salary administration
Finance and accounting Financial analysis, cost analysis, capital
requirements planning, income measurement
Information processing Information system planning, cost-effectiveness
Top management Strategic planning, resource allocation

Activity subsystem Some typical uses

Transaction processing Processing of orders, shipments, and receipts

Operational control Scheduling of activities and performance reports
Management control Formulation of budgets and resource allocation
Strategic planning Formulation of objectives and strategic



Clerical personnel Handle transactions, process input data and answer inquiries
First-level managers Obtain operations data, Assistance with planning, scheduling,
identifying out-of-control situations, and making decisions
Staff specialists Information for analysis. Assistance with analysis, planning and reporting
Management Regular reports, Adhoc retrieval requests, Adhoc analyses, Adhoc
reports, Assistance in identifying problems and opportunities, Assistance
in decision-making analysis.


Information system can be classified in terms of the following.

1. Operating elements
2. Decision support
3. Management activity
4. Organizational function
• Hardware : Hardware must provide for five major functions:
1. Input or entry
2. Output
3. Secondary storage for data and programs
4. Central processor
5. Communications
• Software : The software can be classified into two major types:
System software & Application software
• Database The database contains all data utilized by application software.
• Procedures Three major types of procedures are required:
1. User instructions
2. Instructions for preparation of input by data preparation personnel
3. Operating instructions for computer operations personnel
• Operations personnel Computer operators, systems analysts, programmers, data preparation
personnel, information systems management, data administration, etc.

1. Process Transactions :
Performance of a transaction requires records to
(1) Direct a transaction to take place,
(2) Report, confirm, or explain its performance Or
(3) Communicate the transaction to those needing a record for background information

2. Maintain Master Files :

Many processing activities require creation and files maintenance of master files, which
store relatively permanent or historical data about organizational entities. When
transactions are processed, master file data items are updated to reflect the most current
3. Produce Reports :

Scheduled reports are produced on a regular basis. Special reports are also produced
quickly based on ad hoc (unscheduled) requests.

4. Process Inquiries :
Other outputs are responses to inquiries using database. Inquiries may be regular
inquiries with a preset format or ad hoc inquiries.

5. Process Interactive Support Applications :

The information system contains applications designed to support systems for planning,
analysis and decision making.
1. Transaction documents or screens
2. Preplanned reports
3. Preplanned inquiry responses
4. Ad hoc reports and inquiries responses
5. User-machine dialog results
Transactional documents are of the following types :
1. Informational Reports or confirms that action that will be or has been taken.
2. Action Requests or instructions for action.
3. Investigational Reports exceptions, errors, or other conditions that may require
investigation. Used for control and future reference.
Reports, inquiry responses, and dialog results provide four types of information:
1. Monitoring information - Monitoring information provides a basis for problem finding
and diagnosis and may lead to action, but no action is specified by the information itself.
2. Problem finding information - The information is presented in a format that promotes
identification of problems.
3. Action information -The information is presented with action specified or implied.
4. Decision support The report, inquiry, result, or dialog is oriented to performing
analysis and making a decision. Preplanned reports have a regular content and format and
are usually run on a regularly scheduled basis.
Prepared at a given time, they reflect one of three conditions with respect to the time
period they cover:
1. They describe status or condition at a point in time.
2. They summarize what has occurred during a period such as a week, month, or year.
3. They present results to date and project to the end of the period.
Ad hoc reports and inquiry responses occur at irregular intervals and require data or
analysis whose format has not been preplanned.
Ad hoc request are handled in two ways :
1. The user may be provided with a means (inquiry language) for preparing and
processing the request.
2. An information service may be available to process ad hoc requests.
History of MIS

The history of modern management information systems parallels the evolution of computer
hardware and software. The history also parallels the devolution of management control from
centralization to decentralization. Today, all computer-based systems that collect, process, store
and communicate that data as information are commonly defined as management information
systems, or MIS.

Many MIS pundits divide the history of MIS into the five eras, first chronicled by Kenneth and
Jane Laudon, authors of the textbook Management Information Systems:

 First era: Mainframe and minicomputer computing

 Second era: Personal computers
 Third era: Client/server networks
 Fourth era: Enterprise computing
 Fifth era: Cloud computing

The first era, pre-1965, was the period of huge mainframe computers that were housed in special
temperature-controlled rooms and required computer technicians to operate. IBM was the one-
stop supplier of hardware and software. Computer time-sharing was common due to the
enormous cost of owning and operating mainframes. As computer technology advanced and
computers shrank in size, companies could afford minicomputers, still enormously expensive by
today's standard but sufficiently affordable for large companies to own and do their own in-
house computing.

The second era of personal computers started in 1965 with the introduction of the
microprocessor. By the1980s, it was in full bloom with the proliferation of the low-cost Apple I
and II and the IBM personal computer, or PC. The introduction of VisiCalc spreadsheet software
empowered ordinary employees with the ability to do tasks that companies paid huge sums to do
10 years earlier.

As computing power and autonomy devolved to ordinary employees in the 1980s, a

simultaneous need arose to share computer information with other employees within the business
enterprise. This need advanced the transition to the third era MIS client/server networks.
Employees at all levels of the organization could share information in a variety of formats
through computer terminals linked to computer servers over common networks called intranets.

The fourth era, enterprise computing, consolidated disparate single-application software

applications used by different departments onto one integrated enterprise platform that was
accessed over high-speed networks. Enterprise software solutions integrate essential business
operations -- marketing and sales, accounting, finance, human resources, inventory and
manufacturing -- to harmonize work and facilitate cooperation across the entire enterprise.
Although the application modules used and information accessed differ by departments and
levels of authority, enterprise computing allows a 360-degree view of the entire business
The exponential growth in Internet bandwidth consumption is ushering in the fifth era of
MIS, cloud computing. According to Cisco Systems, worldwide Internet traffic is expected to
reach 2 zettabytes annually by 2019. For context, one zettabyte equals 1,000 exabytes, and one
exabyte equals 1 billion gigabytes. Cloud computing unchains everybody from office-bound
PCs, allowing access to enterprise MIS from anywhere with mobile devices.

The fifth era is also the time of the knowledge worker's ascendancy. As decision-making pushes
to the lowest levels of organizations, MIS is expected to increasingly empower workers not only
as producers of information but also as consumers of the same information. In effect, knowledge
workers, as producers and consumers of MIS information, will determine precisely what
information MIS generates.

A few years before he died, management guru Peter Drucker proclaimed the most important
contribution management must make in the 21st century is to increase the productivity of the
knowledge worker by abandoning the command-and-control management style of the 20th
century and accepting the inevitability of employee autonomy.

Evolution of MIS

1. MIS is designed to process information for effective planning and tactical decision
making. Information System is set of procedures organized to generate information
System is simply as a set of elements joined together for a common objective.
Information is data with meaning for decision making. Data is individual elements of

2. Needed a field of study to bridge the gap between computer programmers and business
world, As computer usage evolved in fields of business and data management, software
applications were need to process non- scientific data. Before the concept of MIS was
created, computer programmers are just creating applications for science and with
calculations Evolution

3. In 1939, Dr. John V. Atanasoff - Mainframe processing of data & This invention led to a
career field established as computer science, his asst. Clifford Berry, constructed first
electronic digital computer.

4. Developed for applying computers in other areas of education, business and every day
life, ENIAC played a role in development of atomic bomb, ENIAC computer(1944)

5. In 1952, the evolving punch card system created by IBM would change the way Govt,
business, Creation of Business Applications for Industry & In late 1950’s and 1960’s
computers would start to integrate into other areas of society, accounting, retail sales,
transportation and online services would benefit from the advent and use of computers.
Education would perceive the way that data way to be processed.

6. The idea was to create “Workforce who could bridge the communication Still a language
problem between programmers and business people who wanted certain”.
7. Applications developed for their business Creation of MIS field (1970) & technical gaps
between management & computer programmers.

8. Computers have assisted centuries into information age by merging concept through
various MIS applications. The concept of MIS has expanded to include data mining, data
retrieved sciences, and technology used in every day devices From 1980 to present, there
has been an explosion of technology in field of IS MIS network