Information Systems and Common Business Processes

Objectives

In this session, you will learn to:

Define Information Systems
Identify the types of Information Systems in a business
environment

Ver. 1.0 Slide 1 of 21

Information Systems and Common Business Processes
Defining Information Systems

An Information System is a collection of the various

components that help derive meaning from the data that is
collected within the organization.
The various components of Information Systems within an
organizations are :
Personnel
Computers
Data processing equipments

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Information Systems and Common Business Processes
Defining Information Systems (Contd.)

The various functions performed by an Information System

are:
To store data that can be used by the management for
analysis and planning
To transfer data across various locations in an organization
easily and quickly
To provide training to employees
To prepare, monitor, and control the budgets

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Information Systems and Common Business Processes
Defining Information Systems (Contd.)

The benefits of using an Information System are:

It helps in the standardization of input and output.
It generates information by organizing data in a meaningful
manner.
It enables security of information by providing various
authorization and authentication mechanisms while accessing
data.
It helps in analysis and decision-making by generating various
types of reports.
It saves cost and time by enabling information transfer quickly
and easily.

Ver. 1.0 Slide 4 of 21

Information Systems and Common Business Processes
Identifying Types of Information in a Business Environment

Various types of information are used in an organization to

make decisions.
Information is required at different levels of operations in a
business environment.
The different levels that use the information are:
Strategic Management
Middle Management
Operational Management

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Information Systems and Common Business Processes
Information Used by Operational Management

Operational Management:
Is responsible for providing the operational or transactional
information to the employees.
Is involved in planning activities for employees who manage
daily transactions.
Plans are usually for a small period of time, such as a week or
a month.

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Information Systems and Common Business Processes
Information Used by Middle Management

Middle Management:
It requires information pertaining to a longer period as
compared to operational management .
The information required by the middle management depends
on the strategies planned by the senior management.
It deals in tactical information.

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Information Systems and Common Business Processes
Information Used by Strategic Management

Strategic Management:
Is involved in making strategic decisions and plans.
Decisions and plans are executed over a comparatively longer
period, such as a year.
Deals in tactical information.

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Information Systems and Common Business Processes
Information Used by Strategic Management (Contd.)

The following figure depicts all the information users and the
information used by them.

Strategic
Strategic Information
Management

Middle Tactical
Management Information

Operational Operational
Management Information

Ver. 1.0 Slide 9 of 21

Information Systems and Common Business Processes
Identifying Types of Information Systems in a Business Environment

The various types of Information Systems in a business

environment are:
Transaction Processing Systems
Management Information Systems
Decision Support Systems
Business Intelligence Systems

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Information Systems and Common Business Processes
Transaction Processing Systems

Transaction Processing System (TPS) handles small or

large volumes of transactions.
Focus is to increase the efficiency of the operations by
automating the business process.
The various types of TPS used in an organization are:
Sales and Marketing Systems
Finance and Accounting Systems
Manufacturing and Production Systems
Human Resource Systems

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Information Systems and Common Business Processes
Management Information Systems

Management Information Systems are used to generate

meaningful information for the middle management.
They help in performing rapid calculations, comparing data,
and generating reports.
Information provided can be in the form of weekly, monthly,
or quarterly reports.
They use the information stored in the TPS to generate
reports.
The commonly generated MIS reports are:
Scheduled reports
Demand reports
Exception reports

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Information Systems and Common Business Processes
Management Information Systems (Contd.)

The following figure depicts the generation of MIS data from

TPS.

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Information Systems and Common Business Processes
Decision Support Systems

Decision Support Systems use sophisticated modeling and

analysis tools to represent the data, thereby enabling the
management to take informed decisions.
Application analyzes business data and presents the results
to support the decision-making process.
They are usually equipped with built-in tools, such as
spreadsheets and simulation tools.
Use the Online Analytical Processing (OLAP ) technology,
which enables users to perform complex analysis on
collated data.

Ver. 1.0 Slide 14 of 21

Information Systems and Common Business Processes
Business Intelligence Systems

Business Intelligence Systems refer to the ability to collect

and analyze huge amount of data pertaining to customers,
markets, vendors, internal processes, and the business
environment.
Use databases, application technologies, and analysis
practices to help the management to make better business
decisions.
Focus on improving the access to and delivery of relevant
information to strategic management.
Business Intelligence entails the process of the following:
Collecting the right information in a timely and functional form
Analyzing the collected information
Converting the collected information or data into a useful form
Distributing the useful form of the data across the enterprise

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Information Systems and Common Business Processes
Business Intelligence Systems (Contd.)

The various BI tools are:

Data Warehousing: The process of gathering data from
numerous internal and external sources and storing it in a
single database for the purpose of analyzing and making
decisions is known as Data Warehousing.
Data Mining: Is an activity that extracts information to discover
hidden facts that are contained in a database.
Online Analytical Processing (OLAP): Provides an analysis and
database framework that facilitates the querying of complex
and large data sets in business transactions.

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Information Systems and Common Business Processes
Business Intelligence Systems (Contd.)

The following figure depicts the OLAP process.

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Information Systems and Common Business Processes
Business Intelligence Systems (Contd.)

Problem Statement 2.1:

Consider the Railway Reservation System. A customer checks
in at the counter and requests for a ticket.
Task:
Based on the preceding information, perform the following
tasks:
1. Identify the various steps involved from the customer’s request for
the ticket, to the customer receiving it.
2. Create two flow diagrams to depict the process flow and the
associated Information Systems in use for each.

Ver. 1.0 Slide 18 of 21

Information Systems and Common Business Processes
Summary

In this session, you learned that:

Information is data that has been processed in a meaningful
way.
An Information System is a collection of the various
components of an organization that help derive meaning from
the data collected within the organization.
The various types of systems in a business environment are:
Transaction Processing Systems
Management Information Systems
Decision Support Systems
Business Intelligence Systems

Ver. 1.0 Slide 19 of 21

Information Systems and Common Business Processes
Summary (Contd.)

Transaction Processing Systems handle small or large

volumes of transaction and form the basis for the Management
Information Systems.
Management Information Systems (MIS) provide the
management at various levels with information they require to
carry out their daily functions. Transaction Processing Systems
form the basis for Management Information Systems.
The Transaction Processing Systems and Management
Information Systems together form the basis of the Decision
Support Systems
Business Intelligence Systems (BIS) are an advanced form of
MIS and DSS that are designed to extract relevant information
from large amounts of data collected by various business
systems over a period of time.

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Information Systems and Common Business Processes
Summary (Contd.)

BI Systems are used by organizations to provide insights that

enable the decision-making process.
Data Warehousing is the method of storing large volumes of
data in one location.
OLAP Systems provide an analysis and database framework
that facilitates the querying of complex and large data sets in
business transactions.
A Data Mart is a subset of a Data Warehouse.
Data Mining is the activity used to extract previously unknown,
valid, and actionable information contained in databases or
data sources.

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