Dr.

Ankit Mehrotra

Summary Points for Module 1

Information System
An information system can be defined technically as a set of interrelated
components that collect (or retrieve), process, store, and distribute
information to support decision making and control in an organization. In
addition to supporting decision making, coordination, and control,
information systems may also help managers and workers analyze problems,
visualize complex subjects, and create new products. Information systems
contain information about significant people, places, and things within the
organization or in the environment surrounding it.

The Fundamental Roles of IS in Business

There are three fundamental reasons for all business applications of information
technology. They are found in the three vital roles that information systems
can perform for a business enterprise:
 Support of its business processes and operations.
Example: Most retail stores now use computer-based information systems
to help them record customer purchases, keep track of inventory, pay
employees, buy new merchandise, and evaluate sales trends.
 Support of decision making by its employees and managers.
Example: Decisions about what lines of merchandise need to be added or
discontinued, or about what kind of investment they require, are
typically made after an analysis provided by computer-bases
information systems.
 Support of its strategies for competitive advantage.
Example: Store management might make a decision to install touch-screen
kiosks in all of their stores, with links to their e-commerce website for
online shopping. This might attract new customers and build customer
loyalty because of the ease of shopping and buying merchandise
provided by such information systems.

Trends in Information Systems:

The roles given to the information systems function have expanded significantly
over the years.
1950s - 1960s - Data Processing - Electronic data processing systems
Role: Transaction processing, record keeping, and accounting, and other
electronic data processing (EDP) applications

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1960s - 1970s - Management Reporting – Management information systems

Role: Providing managerial end users with predefined management reports
that would give managers the information they needed for decision-
making purposes.
1970s - 1980s - Decision Support - Decision support systems
Role: The new role for information systems was to provide managerial end
users with ad hoc support of their decision-making process. This
support would be tailored to the unique decision-making styles of
managers as they confronted specific types of problems in the real
world.
1980s - 1990s - Strategic and End User Support
Role: End users could use their own computing resources to support their
job requirements instead of waiting for the indirect support of corporate
information services departments.
End User Computing Systems
Role: Direct computing support for end user productivity and
work group collaboration.
Executive Information Systems (EIS) -
Role: These information systems attempt to give top executives
an easy way to get the critical information they want, when
they want it, tailored to the formats they prefer.
Expert Systems (ES) and other Knowledge-Based Systems
Role: Expert systems can serve as consultants to users by
providing expert advice in limited subject areas.
Strategic Information Systems (SIS)
Role: Information technology becomes an integral
component of business processes, products, and services
that help a company gain a competitive advantage in the
global marketplace.
1990s - 2000 – Electronic business and commerce systems
Role: The rapid growth of the Internet, intranets, extranets, and other
interconnected global networks has revolutionised the operations and
management of today’s business enterprises.

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DATA AND INFORMATION

Information is everywhere in an organization. Employees must be able to obtain
and analyze the many different levels, formats, and granularities of
organizational information to make decisions. Successfully collecting,
compiling, sorting, and analyzing information can provide tremendous insight
into how an organization is performing.
Data(+Context) Information (+Experience)Knowledge (+Vision)Wisdom

TRANSACTIONAL AND ANALYTICAL INFORMATION

Transactional information – encompasses all of the information contained
within a single business process or unit of work, and its primary purpose is to
support the performing of daily operational tasks. For example, sales order
entry, payroll data, hotel reservation data, withdrawal & deposition data and
the likes
Analytical information – encompasses all organizational information in detail
and consolidated form, and its primary purpose is to support the performing
of managerial analysis tasks. For example,

Formats of information
Information can be stored and displayed in different formats. Information
formats include document, presentation, spreadsheet, and database.
Different formats of information leads to the issue of compatibility and also
calls for analysis and vigilance by the manager to extract the desired piece
of information.

Information Granularity :
Refers to the extent of details within the information fine (detailed) to coarse
(consolidated / aggregated)
Transactional data (fine)  Analytical data (coarse)

THE VALUE OF TIMELY INFORMATION

Timeliness is an aspect of information that depends on the situation
Real-time information – means immediate, up-to-date information
Real-time systems – provide real-time information in response to query
requests

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THE VALUE OF QUALITY INFORMATION

Business decisions are only as good as the quality of the information used to
make the decisions
ID Last First Street City State Zip Phone Fax E-mail
Name Name
113 Prasad 123 Vineet Lucknow UP 226010 (0522) (0522) pa@gmail.com
Khand 2378901 234567
114 Nigam Amit 12A Lucknow UP 226020 (0522) (0522) (0522)2364279
2364279 2364279
115 Misra Saurabh 1/91 Vivek Lucknow UP 226010 2394296 2394545 ms@msn.com
Khand
116 Mishra Saurabh 1/91 Vivek Lucknow UP 226010 2394296 2394545 ms@msn.com
Khand

The five characteristics of high-quality information include

The four primary sources of low-quality information include:

 Online customers intentionally enter inaccurate information to protect their
privacy
 Information from different systems that have different information entry
standards and formats
 Call center operators enter abbreviated or erroneous information by
accident or to save time
 Third party and external information contains inconsistencies,
inaccuracies, and errors

Understanding the Benefits of High-Quality Information

 High-quality information can significantly improve the chances of making
a good decision
 Good decisions can directly impact an organization's bottom line

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MIS and DSS comprises of:-

1. OLAP/IIMD/MDA - Online Analytical Processing (OLAP) provides
Intelligent Interface for Managerial Decisions (IIMD).
OLAP is also called as Cubical Analysis, IIMD and MDA (Multi-
Dimensional Analysis).
2. DR (Dashboard Reporting): Dashboard Reporting is single page reporting
for managers discussing current status of organization. One of the most
preferred and popular mode of reporting by the managers in current era.
3. DM (Data Mining): Data Mining helps to find hidden patterns and helps
in prediction of certain events.

Sub-systems of MIS are MKIS, FIS, HRIS, etc.

 Marketing Information System (MKIS): supports marketing activities by
analyzing marketing data.
 Financial Information System (FIS): supports financial activities by
analyzing financial data.
 Human Resource Information System (HRIS): supports HR activities by
analyzing HR data.

Types of Information Systems:

Information Systems perform important operational and managerial support roles
in businesses and other organizations. Therefore, several types of information
systems can be classified conceptually as either:
 Transaction/Operations Support Systems
 Management Support Systems

Transaction/Operations Support Systems

Information systems are needed to process data generated by and used in business
operations. Such systems produce a variety of information products for
internal and external use. However, they do not emphasize producing the
specific information products that can best be used by managers. Further
processing by management information systems is usually required. The role
of a business firm’s operations support systems is to:
 Effectively process business transactions
 Control industrial processes
 Support enterprise communications and collaboration
 Update corporate databases

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Transaction Processing Systems (TPS) - Focus on processing the data

generated by business transactions and operations. Transaction
processing systems record and process data resulting from business
transactions (sales, purchases, inventory changes). Transaction
processing involves the basic activities of
1. data entry,
2. transaction processing,
3. database maintenance,
4. document and report generation, and
5. inquiry processing
TPS also produce a variety of information products for internal or external
use (customer statements, employee pay cheques, sales receipts etc.).
TPS process transactions in two basic ways:
 Batch Processing - transactions data is accumulated over a
period of time and processed periodically.
 Real-time (or online) processing - data is processed
immediately after a transaction occurs. Many firms are using
the Internet, intranets, extranets, and other networks for
online transaction processing to provide superior service to
their customers and suppliers. (generally referred as OLTP –
Online Transaction Processing Systems)

Workgroup Systems (Groupware) – Enhance team and workgroup

communications and productivity, and include applications that are
sometimes called office automation systems.
Office Automation Systems (OAS) – supports automation of
office work. Examples include MS-Office suite, Open Office,
Goggle Docs, Lotus etc.

Management Support Systems [= MIS (IRS) + DSS + ESS]

When information system applications focus on providing information and
support for effective decision making by managers, they are called
Management Support Systems. Providing information and support for
decision making by all types of managers and business professionals is a
complex task. Conceptually, several major types of information systems

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support a variety of decision-making responsibilities: (1) management

information systems, (2) decision support systems, and (3) executive
information systems.
Management information systems (MIS) - are the most common form of
management support systems. They provide managerial end users with
information products that support much of their day-to-day decision-
making needs. MIS provide a variety of pre-specified information
(reports) and displays to management that can be used to help them
make more effective, structured types of day-to-day decisions.
Information products provided to managers include displays and
reports that can be furnished on demand, periodically, according to a
predetermined schedule, whenever exceptional conditions occur. As a
result, they are also called as Information Reporting Systems.
Decision support systems (DSS) – provide managerial end users with
information in an interactive session on an ad hoc (as needed) basis.
Managers generate the information they need for more unstructured
types of decisions in an interactive, computer-based information system
that uses decision models and specialized databases to assist the
decision-making processes of managerial end users.
Executive support systems (ESS) - provide top/senior management with
immediate and easy access to selective information about key factors
that are critical to accomplishing a firm’s strategic objectives. EIS are
easy to operate and understand.

Other Classifications of Information Systems:

Several other categories of information systems that support either operations or
management applications include:
 Expert Systems
 Knowledge Management Systems
 Functional Business Information Systems
 Strategic Information Systems
 Cross-functional Information Systems

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Managerial Challenges of Information System/Technology:

For managerial end users, the information systems function represents:
 A major functional area of business that is important to a business’ success
 An important factor affecting operational efficiency, employee
productivity and morale, and customer service and satisfaction.
 A major source of information and support needed to promote effective
decision making by managers.
 An important ingredient in developing competitive products and services
that gives an organization a strategic advantage in the marketplace.
 A major part of the resources of an organization and its cost of doing
business
 A vital, dynamic, and challenging career opportunity for many men and
women.

Relationship of Systems to One Another

The systems serving different levels in the organization are related to one another.
TPS are typically a major source of data for other systems, whereas ESS are
primarily a recipient of data from lower-level systems. The other types of systems
may exchange data with each other as well. Data may also be exchanged among
systems serving different functional areas. For example, an order captured by a
sales system may be transmitted to a manufacturing system as a transaction for
producing or delivering the product specified in the order or to a MIS for financial
reporting.

It is definitely advantageous to integrate these systems so that information can

flow easily between different parts of the organization and provide management
with an enterprise-wide view of how the organization is performing as a whole.
But integration costs money, and integrating many different systems is extremely
time consuming and complex. This is a major challenge for large organizations,
which are typically saddled with hundreds, even thousands of different
applications serving different levels and business functions. Each organization
must weigh its needs for integrating systems against the difficulties of mounting
a large-scale systems integration effort.

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