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Chapter 1

Introduction to Information Systems
1.1 What is an Information System?

An Information system is a set of inter-related components that collects (or retrieves), process, store and distribute information to support decision-making and control, coordination, and visualisation in an organisation.


Differences Between Data and Information

Data Streams of raw facts representing events which occur in organisations or physical environments before it is organised and arranged in a meaningful way. Information Data organised in a meaningful way. Input The capture or collection of raw data from within the organisation or from its external environment for processing in an information system. Processing The conversion, manipulation, and analysis of raw input into a form that is more meaningful for humans. Output The distribution of processed information to the people who will use it or to the activities for which it will be used. Feedback Output that is returned to the appropriate members of the organisation to help them evaluate or correct input. Computer-Based Information System, CBIS Information systems that rely on computer hardware and software for processing and dissemination information. Formal System System resting on accepted and fixed definitions of data and procedures, operating with pre-defined rules.


insurance and law.2. Systems are structured and hard to change. sewerage.1 Emergence of the Global Economy • Imports/Exports much more important • Success dependant on global operating • Increases value of information • CBIS needed for analysis on a global scale • Markets no longer protected. architecture. Landscaping. and in service industries such as copying. but they cannot alone produce the information a particular organisation needs. 1.Formal systems use accepted and fixed definitions of data and procedures for collecting. • In 1976 in US. 2 . software development and deliveries. wood and bricks in a house. education. An example of an informal systems would be the “Office Grapevine”. in contrast. The are the materials which a house is built from. must understand problems they are designed to solve. To understand CBIS. storing. more white-collar workers than farm and blue-collar workers • People employed in sales. internal decorating. Analogy with hammer. and organisational processes leading to solutions.2. healthcare. architectural and design elements. Similarily for CBIS. but a house is more than just a collection of materials. Computers and software are distinct from Information Systems.2 Why Information Systems? Three reason for recent growth in need for CBIS: • Emergence of the Global Economy • Transformation of the Industrial Economies • Transformation of the Business Enterprise 1.2 Transformation of Industrial Economies • Major powers moving from industrial-based economy to knowledge/informationbased service economy. banks. also required. processing. rely on unstated rules of behaviour. and will not be discussed further. they are harder to analyse and study due to their free-form nature. Computer hardware and software are the building bricks. etc. While informal systems are often vital to the success of a company. disseminating and using data. Informal systems. nails. Firms need to be fit to compete with foreign competitors • Powerful communication and informations systems required 1. Manufacturing moves to low-wage economies.

and information-intensive. • Firms even more dependant on knowledge. did not exist 30 yrs ago. • New organisations. • New industries grown which are knowledge. 1. learning.2. appealing to loyalty of employees. such as computer game development. structure system of specialists. centralised. decentralised. • Old industries use information much more and so hire much more specialists than before. with fixed set of operating procedures • New style is flattened. customer orientationto achieve coordination among employees and appeals to professionalism. • New method relies on informal commitments and networks to establish goals. and formal rules. and decisions of employees. • Information and technology are critical. flexible arrangement of generalists. flexible arrangements of teams and individuals working in task forces. • Traditional method used formal plans. This style is still evolving. • IT takes up 70% of invested capital in service industries like finance. 3 . strategic assets for firms.• Work involves knowledge and information • Accounts for 60% of the US GNP and 55% of the labour force. relying on near-instant information to deliver mass-customised products/services to individual clients. but believed to be best way forward.3 Transformation of the Business Enterprise • Organisation in firms changing • Traditionally had pyramid structure: hierarchial. rigid labour division. Quality of systems affect productivity and decisions about IT critically important to prosperitiy and survival of firm. such as environmental engineering firms. insurance and real estate.

Payroll. TPS.Chapter 2 Levels and Types of Computer-Based Information Systems 2. decision-making. 2. Sales/Marketing 4 . • Five functional levels: 1. these systems serve the operational level of the organisation • Examples are Sales Order Entry Systems. Hotel Reservation Systems. and administrative activities of middle managers.2. is a computerised system that performs and records the daily routine transactions necessary to conduct the business. Strategic-level systems Information systems that support the long-range planning activities of senior management.1 Levels of Information System There are four different levels of information system: Operational-level systems Information systems that monitor the elementary activities and transactions of the organisation.1 Types of Information System Transaction Processing System (TPS) Definition: A Transaction Processing System. Knowledge-level systems Information systems that support knowledge and data workers in an organisation. Employee Record-keeping and Shipping.2 2. controlling. Management-level systems Information systems that support the monitoring.

2 Knowledge Work Systems and Office Automation Systems Definition: A Knowledge Work System. • KWS and OAS serve organisation at the knowledge level • KWS aid knowledge workers. Secretaries. and highly structured. or scheduling system. OAS. KWS. maintaining records on income/expenses. Failure could bring down the business (like if UPS lost their package tracking system).2. tasks. 2. • OAS includes Word Processors. and KWS assist in this task. DTP and document imaging. OAS coordinates workers. such as word processing. is an information system that aids knowledge workers in the creation and integration of new knowledge in the organisation. such as granting credit. and are members of a recognised profession. Human Resources 5. Other • TPS very critical to business. Process information rather than create it. as well as smoothing integration of new knowledge into business • Data workers typically less formal. doctors and pharmacists. that is designed to increase the productivity of data workers in the office. filing clerks. • TPS monitored for status of internal operation and firms relationship to external environment. • TPS major producers of input for other systems (e. • OAS designed to increase productivity of data workers in office by supporting coordination and communication. producing reports like income statements and balance sheets. • At operational level. manipulate and disseminate information. resources and goals predefined. 5 .2. geographical units and functional areas. OAS aid data workers (though also used by knowledge workers) • Knowledge workers usually hold formal university degrees. Finance/Accounting 4. lawyers. or managers who use.g Payroll and other accounting TPS supplies data to general ledger system. e-mail system. Definition: An Office Automation System. Role is to create new knowledge. accountants. advanced education degrees. is a computer system. such as engineers. Manufacturing/Production 3.

• Generally inflexible with little analytic ability. However. 4. MIS relatively inflexible 7. 3. • Oriented almost exclusively to internal events. They are designed to report on existing operations and therefore to help provide day-to-day control of operations. • Simple analysis such as summaries/comparisons rather than sophisticated mathematical models or statistical techniques. MIS have little analytic capability 5. MIS. are information systems at the management level of an organisation that serves the functions of planning.2.4 Decision Support Systems Definition: Decision Support Systems.2. 2. controlling and decision-making. MIS support structure decisions at the operational and management control levels. MIS rely on existing corporate data and data flows. • DSS serve the management level 6 . DSS. addressing structured questions known well in advance. • Generally take input from TPSs. serving functions of planning. are information systems at the management level of an organisation that combines data and sophisticated analytical models or data analysis tools to support semi-structured and unstructured decision-making. annual reports. Characteristics of Management Information Systems 1. • Serve managers interested in weekly. MIS generally aid in decision making using past and present data. • MIS serve management level • Provide managers with reports (or on-line access) to current performance and historical records. monthly. 2.2. MIS have internal rather than external orientation.3 Management Information Systems Definition: Management Information Systems. controlling and decision-making by providing routine summary and exception reports. they are also useful for planning purposes of senior management staff. 6. MIS are generally reporting and control oriented.

adaptability and quick response 2. Carries bulk cargo of coal. DSS operate with little or no assistance from professional programmers 3. charters others and bids for shipping contracts in open market to carry general cargo. fuel/water consumption and loading patterns. • DSS tend to be user-friendly and interactive Example DSS is voyage-estimation of metals company. not easily specified in advance. • DSS draw from TPS.2.• Aid in decisions that are semi-structured. Owns some vessels. speed. is an information system at the strategic level of an organisation designed to address unstructured decisionmaking through advanced graphics and communications • ESS serve strategic level • ESS address unstructured decisions and create generalised computing and communications environments rather than give a fixed application or computing capability 7 . but also external sources (such as stock prices and competitor prices) • DSS have large analytical capability with many models to analyse data and condense large volumes of data into a useful form. Responsive and quick enough to run several times per day to respond to changing information. DSS offer flexibility. oil.5 Executive Support Systems Definition: An Executive Support System. Can answer questions like the following: • Given customer delivery schedule and offered freight rate. which vessel at what rate will maximise profits? • What is ideal speed for vessel to meet schedule and maximise profits? • What is optimal loading pattern for ship bound for US West Coast from Malaysia? Characteristics of Decision Support Systems 1. ESS. 4. freight rates for cargo types and port costs. unique and rapidly changing. ores and finished product. 2. Voyage estimation system uses financial and technical details as inputs. Financial inputs include ship/time costs. Technical includes ship cargo capacity. DSS use sophisticated data analysis and modelling tools. DSS provide support decisions and problems whose solutions cannot be specified in advance. distances.

emphasise reduction of time and effort to get information • Heavy emphasis on data visualisation • ESS do not solve specific problems. • ESS filter. compress and track critical data. ESS answer questions such as: • What business should we be in? • What are the competitiors doing? • What new acquisitions would protect us from cyclical business swings? • Which units should we sell to raise capital for acquisitions? 8 . so less use of analytical models.• ESS designed to incorporate data about external events such as new tax laws or competitiors. providing generalised capacity applicable to changing problems. and draw from internal MIS and DSS.

such as fatigue and worry. Human intelligence also enables ability to impose a conceptual apparatus on the surrounding world. Using analogy and metaphors. creating organisational knowledge base. physically or mentally dangerous. Such systems can be useful advisors in times of crisis. Common sense and generality resides in ability to create metaphor and analogy.Chapter 3 Artificial Intelligence and Expert Systems 3. 9 . lunch. dinner. analogies and similes. and selected reasoning patterns. Successful AI systems are based on human expertise. • Creation of mechanism not subject to human weaknesses. especially in case of tasks environmentally. such as like or as. Business in interested in AI for several reasons: • Preservation of expertise that may be lost through retirement. They lack the common sense and generality of naturally intelligent human beings. knowledge resource for employees to learn rules-of-thumb not found in textbooks. • Storage of information in active form. accomplish physical tasks. is the effort to develop computer-based systems that can behave like humans. much broader than computer intelligence. Thinking in terms of these concepts. humans can create new rules. or death of acknowledged expert. and act intuitively and instinctively without rules. They do not come up with new or novel solutions. use a perceptual apparatus and emulate human expertise and decision making. Key factor is ability to develop association and use metaphors. resignation. AI. with the ability to learn languages. knowledge. and acting on them are central characteristics of intelligent human behaviour. Meta-concepts like cause-and-effect and time.1 Artificial Intelligence Artificial Intelligence. and concepts of lower order like breakfast. Human intelligence is vastly complex. are imposed by humans on the environment. apply old rules to new situations. but do not exhibit human intelligence.

• Expert systems try to capture essence of human expertise and automate decision-making. who is an AI specialist who translates the knowledge into form suitable for system design. Knowledge Frames Method of organising expert system knowledge into chunks. 10 . relationships based on shared characteristics determined by the user. act is executed.1.• Elimination of routine and unsatisfying tasks held by people.1 Expert Systems Definition: An Expert System is a knowledge-intensive computer program that captures the expertise of a human in limited domains of knowledge. • Only certain classes of problem suitable. System cannot learn new knowledge by itself. • Development requires experts and knowledge engineer. means some action. Must have few possible outcomes. Rule Base Collection of knowledge in an AI system that is represented in the form of IF-THEN rules. 3. Knowledge Base Model of human knowledge used by expert systems. • Enhancement of knowledge base by suggesting solutions which are too massive and complex for fast human analysis. • Use knowledge base to model knowledge. Rule-based Expert System AI program with large number of interconnected and nested rules that are the basis for knowledge in the system. • Rules are IF-THEN statements. all of which are known in advance. • Development time and costs high. which if true. IF cond THEN act An example would be: IF under 21 yrs of age THEN refuse entry • Knowledge frames group object with shared characteristics. Knowledge base fragile and brittle. cond. Generally have some condition.

• Most effective for automation of lower-level clerical functions. such as knowledge based on analogy. and need for intuitive grasp of problems. 11 .• Much knowledge unmappable. intuition and a sense of things. • Generally unsuitable for decision-making at management level due to diverse sources. such as granting of credit.

Chapter 4 System Development and Organisational Change 4.1.streamlining of procedures to improve efficiency. bank-teller access to customer accounts. Automation 2.1 Organisational Change There are four major types of organisational change: 1. 12 . • Procedures change to remove bottlenecks Example in banks. 4. Paradigm Shift 4.1 Automation Definition: Using the computer to speed up the performance of existing tasks • Very common form of IT-enabled organisational change. eliminating obvious bottlenecks. so that automation make operating procedures more efficient. Rationalisation of Procedures 3.2 Rationalisation of Procedures Definition: The streamlining of standard operating procedures. nationwide airline reservation system). • Deeper change . existing procedures become painfully cumbersome. • Assists employees in performing tasks (such as calculating paycheques and payroll registers. and standard methods for calculating interest and account balances. • Automation often reveals bottlenecks in production. which have standard rules for issuing account numbers.1. Business Re-engineering 4.

simplify and redesign business processes • Re-organise work-flows and eliminates repetitive. Production and Maintenance 13 .4. • More radical change • Use IT to analyse. Ford had over 500 people in its North American accounts payable division. and invoicing. combining steps to cut waste and eliminating repetitive. 4. Programming 4. 4. Ford reduced its head-count in accounts payable by 75% and produced more accurate financial information. System was re-engineered wherein purchasing department enters order into online database checked by receiving department when items arrive.4 Paradigm Shift Definition: Radical reconceptualisation of the nature of the business and the nature of the organisation • Change in view of business and its organisation • Affects design of entire organisation • Transforms how business conducts business and possibly nature of organisation.3 Business Re-engineering Definitions: The radical re-design of business processes.2 Systems Development Systems development is the activities that go into producing an information systems solution to an organisational problem or opportunity. Conversion 6.1. Testing 5.1. Ford invoice-less processing widely-cited example. If received goods match purchase order. Design 3. cheque automatically generated to be sent to the vendor. with no need for invoice. There are six major steps involved in developing Information Systems: 1. paper-intensive tasks (possible causing job losses). Clerks spent most of their time resolving discrepancies between purchase orders. receiving documents. Analysis 2. quality and service and to maximise the benefits of information technology. Changes often very difficult to orchestrate and can be very costly. paper-intensive tasks to improve cost. Note that there is a significant business-risk involved in both Business Reengineering and Paradigm Shifts due to the extent of the changes involved.

identifies primary owners and user of data in organisation • Performs feasibility study.3 Completing Development Process Programming Process of translating the system specifications prepared during design stage into program code. Production Stage after new system is installed and conversion is complete.2 Systems Design Definition: Detailing how a system will meet the information requirements as determined by the systems analysis. where and how information is needed.2.1 Systems Analysis Definition: The analysis of a problem that the organisation will try to solve with an information system • Analysis consists of defining the problem.2. • Physical design translates the abstract logical model into specific technical design for the new system. identifying its causes. • Creates road map of existing organisation and systems. not bias of technical staff. • Information requirements is a detailed statement of the information needs that a new system must satisfy. and when. • End user input crucial. 4.2. • Shows how system will meet objectives set out be analysis. can make or break information system solution.4. Testing Exhaustive and thorough process that determines whether system produces desired results under known conditions. • Establishing information requirements crucial. when system is reviewed by users and technical specialists to see how well it meets original goals. and identifying information requirements. 4. • Design is overall plan or model for system (similar to blueprint for a building or house). which determines whether solution is achievable. 14 . Conversion Process of changing from old system to the new system. specifying the solution. given organisations resources and constraints. identifies who needs what information. System must reflect needs of user. • Designer details system specifications that deliver functions identified during analysis. • Logical design lays out the components of information system and relationship to each other as they would appear to users.

or improve processing efficiency. or procedures to production system to correct errors. documentation.Maintenance Changes in hardware. meet new requirements. 15 . software.