MANAGEMENT INFORMATION SYSTEM

Chapter One
Fundamentals of Information Systems and
their Relationship in Business Applications

Lecture 1: Fundamentals of Information Systems

Technology is configured into systems that help to manage

information to improve organizational performance

Ketema A. Gemeda (PhD )

ketem2006@gmail.com

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 Fundamentals of Information Systems
 Data vs. Information
 Data: data are streams of raw facts, figures, group of symbols,
events occurring in organizations or in the physical environment
– It is a collection of raw figures that represent features or details
about people, objects, places or events.
 Information: is data shaped into meaningful form.
– It is a data that has been rearranged, processed, organized into a
form perceived as useful by the recipient.
– It is a collection of meaningful facts and figures that can be
used as a base for guidance and decision making.
– Data to be an Information: it has to be SMART (Simple
Meaningful Accurate Reliable and Time bounded).

Information -
Data Processed Meaning
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 Fundamentals of Information Systems
 Think of the data that is created when you buy a product from a
retailer. These include:
– Time and date of transaction (e.g. 10:05 Tuesday 04 September 2018)
– Transaction value (e.g. 55.00 Birr)
– Facts about what was bought (e.g. hairdryer, cosmetics pack, shaving foam)
and how much was bought (quantities)
– How payment was made (e.g. credit card, credit card number and code)
– Who recorded the sale (Employee Name)

 Raw data from a supermarket checkout counter can be processed

and organized to produce meaningful information such as the total
unit sales of dish detergent or the total sales revenue from dish
detergent for a specific store or sales territory.

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 Fundamentals of Information Systems
Data and Information

Distinction between data and information

Data Information
1. It is a stored facts. 1. It is a presented facts
2. It is technology based 2. It is business based
3. It is gathered from various sources 3. It is generated form of data
4. It is unprocessed. 5. It is processed
5. Not useful for decision making 6. Useful for decision making

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 Fundamentals of Information Systems
 Knowledge
– Facts which exist only in the mind of beholder
– Complex structures in human memory.
– Memorization with understanding
– Derived from processing factual knowledge
– Circumstance or condition of catching truth or fact through
reasoning
– Different information and principles acquired by mankind, which
has a declarative nature
– It is the collection of information, and the ability to change such
information into action.
– It is related to the different techniques used by other people in the
past or being used at the present to solve scientific and social
problems.

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 Fundamentals of Information Systems
 Types of knowledge
 Explicit Knowledge:
– Articulated in a formal language and easily transmitted among
individuals both synchronously and asynchronously
– Codified in book, manuals, picture, and video
– Can be transferred easily with the help of electronic tools
– Disadvantage: it is difficult to handle the abundant volume of
information
 Tacit Knowledge:
– Expertise and experience not formally documented
– A personal knowledge embedded in individual experience involving
such intangibles like personal belief instinct, perspective and value.
– Transferred through face to face communication, revealed at the
time of informal discussions
– More difficult to capture and diffuse
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 Data, Information, Knowledge- Relationships
Data Domain of
(Letters, numbers, graphics… Technology
Representing reality and knowledge)

Knowledge
Information (Complex cognitive entity;
(Data understood, cause-effect theories,
meaning) vocabularies/conceptual maps,
know-how, experience)

Domain of business Domain of Human Brain

 Most of work in modern organizations is about data, knowledge and
information.
 Occupational groups:
– Clerks: manipulate data
– Managers: interpret data in reports & elsewhere to get informed for
managing.
– Professionals: use knowledge to analyze & resolve professional problems
& advance knowledge. 7
Data, Information, Knowledge, and
Wisdom

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 Information and Human Evolution
 The three parts of human evolution
1. Agrarian Society
2. Industrial Society
3. Information Society
 The evolution and characteristics of the information age

Agricultural Age Industrial Age Information Age

Time period Pre-1800s 1800 to 1957 1957 to present

Majority of Farmers Factory workers Knowledge

workers workers

Partnership People and land People and People and

machines people

Principal tool Hand tools Machines Information

Technology
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 Information Society
 The characteristics of information age
 The information age is distinguished from previous ages on the basis of
five characteristics.
– The Information Age came about with the rise of an information
based society.
– Businesses in the Information Age depend on information
technology to get their work done.
– In the Information Age, work processes are transformed to increase
productivity.
– Success in the Information Age is largely determined by the
effectiveness with which information technology is used.
– In the Information Age, information technology is embedded in
many products and services.

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 Stage of Development in Information society
1. Information rich society (1960 &1970s)
– Which is characterized by high production of information
– High diffusion of ICT/IT highly used for production, and high
employment in ICT area.
2. Information based society (1980s - 1990s)
– It can be characterized by 3 points : globalization, Specialization,
and Connectivity.
1. Globalization- aggravated by uni-production, Internet was
access for all public, international telephone
2. Specialization: using of specialized devices
– Specializing on single production
3. Connectivity enable people to communicate
– Computer technology
– Incorporate different network like-( LAN, WAN and MAN)
– Highly aggravated by increase of technology and decrease of price.
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 Stage of Development in Information society (…)
3. Information dominated Society (1990s+)
 A society group that highly dominated by: production, transmission,
use of information and ICT
– Information become a commodity (i.e. the introduction of selling
Hardware and Software are a major development.)
– Society become dependent on information
– Information becomes a culture
– Economy is highly dominated by information producing company

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 Criteria's of Information Society
1. Technological: wide application of information technologies in office, in
factories, at homes and etc.
2. Social: the use of information to improve quality of life, (Society use
information to improve his/ her quality of life among society.)
3. Economic: for economic development information is considered as a key
factor.
– Information as (resources, services, commodity, sources of added
value, employment).
4. Cultural: recognition of cultural values of information, how much
information affect our culture.
5. Political: freedom of using information.
– This freedom includes right to speak, write, and disseminate
information to public.

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 Fundamentals of Information Systems
 System: a group of interrelated components working together toward a
common goal by accepting inputs and producing outputs in an
organized transformation process.
– System elements: Input, Output, Boundary, Subsystem and
Interrelationship
 Information System (IS):
– An IS can be a set of interrelated components that collect (or
retrieve), process, store, and distribute information to support
decision making and control in an organization.
– IS may also help managers and workers analyze problems, visualize
complex subjects, and create new products.
– Support decision making, coordination, and control
– Its mission is to improve the performance of people in organizations
through the use of information technology
– Examples: ATMs, Airline Reservation & Course Registration Systems
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Industrial Revolution Rap

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 Information Systems Processing
 Information processing can be either manual or computerized
(automated)
 Four steps involved during Information systems processing:
1. Input: captures raw data from organization or external
environment
2. Processing: converts raw data into meaningful form
3. Storage/retrieval: saving data/information for future use
(searching for & finding data/information which resides)
4. Output: transfers processed information to people or activities
that use it
• Feedback: output returned to appropriate members of organization
that help to evaluate or correct input stage.

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 Information Systems Processing
 An IS contains information about an organization and its surrounding
environment
– Information systems processing environmental actors are:
customers, suppliers, competitors, stockholders, and regulatory
agencies, interact with the organization and its IS.
Manual Vs Automated Information Processing
• Manual Information Processing: is processing of information using
paper, pencil, and brain.
• Automated Information Processing is processing of information with
the help of computers. This is much more flexible than the manual one
and a lot faster.
 Computer/Computer program vs. information system
– Computers and software are technical foundation and tools, similar to
the material and tools used to build a house.
– Building a successful Information System is analogy to like building a
„House‟
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 Information System Components
 Information System (IS)
– Arrangement of people, data, processes, information presentation and
information technology that interact to support and improve day-to-
day operations in a business as well as support the problem-solving
and decision-making needs of management and users.
 The Five Key components of Information systems are: hardware,
software, data, processes, and people
 Hardware: physical layer of the information system
– It includes: servers, networks, work stations, telecommunication
equipment, cables, input and output devices and many others.

data people

software processes

hardware
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 Information System Components
 Software: the programs which control the hardware and produce the
desired information and results.
 System software manages the hardware components.
– Examples: Operating Systems, Security Software, utility Programs, and
Network Operating System (NOS)
 Application software: the programs that support day-to day business
functions and provide process and manage the information user need.
– Examples: Company-wide applications, called Enterprise applications,
include order processing system, payroll systems, and company
communication network
 Data: is the raw material that an IS transforms into useful information
 Processes: tasks and business functions that users, managers, and IT staff
members perform to achieve specific results
– Processes are the building blocks of an IS
– Processes represent actual day-to-day business operations
 People: includes people who manage, run, program, and maintain the
system.
– Example: IT professionals
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 Dimensions of Information Systems
 An effectively using
information systems require,
understanding:
 Organization
 Management, and
 Information technology
shaping the systems.
 An IS creates value for the
firm as an organizational
and management solution
to challenges posed by the
environment.
 Technology is configured into systems that help
Information Systems to manage information to improve
are more than organizational performance
computers
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 Dimensions of Information Systems
 Organizational dimension of IS:
 Organizations have a structure that is composed of different levels and
specialties.
 Their structures reveal a clear-cut division of labor.
 Hierarchy of authority and their responsibility:
– Senior management: makes long-range strategic decisions about
products, services and ensures financial performance of the firm.
– Middle management: carries out the programs and plans of senior
management.
– Operational management: responsible for monitoring the daily
activities of the business.
– Knowledge workers: such as engineers, scientists, or architects,
design products or services and create new knowledge for the firm
– Data workers: such as secretaries or clerks, assist with scheduling
and communications at all levels of the firm.
– Production or service workers: produce the product and deliver the
service

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 Dimensions of Information Systems
 Business organizations are
hierarchies consisting of three
principal of management
levels:
– Senior management
– Middle management
– Operational management.
 Information systems serve each
of these levels.
 Scientists and knowledge
workers often work with middle
management.

Levels in a Firm 22
 Dimensions of Information Systems
 Organizational dimension of IS: (Cont….)
 Separation of business functions or specialized tasks performed by
business organizations:
– Sales and Marketing: selling the organization‟s products and
services
– Human Resources: attracting, developing, and maintaining the
organization‟s labor force; maintaining employee records
– Finance and Accounting: managing the organization‟s financial
assets and maintaining the organization‟s financial records
– Manufacturing and Production: producing and delivering products
and services
 A common observation is that “Every business is different.”
 Information systems serve each of these business function.
– Sales/marketing: order processing, billing, sales planning, etc.
– Finance/accounting: general ledger, accounts payable, etc.
– Human resources: personnel administration, time and performance
management, payroll, etc.
– Manufacturing/production: purchasing, shipping, etc.
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 Dimensions of Information Systems
 Management dimension of information systems
 Management‟s job is to make sense out of the many situations faced
by organizations, make decisions, and formulate action plans to solve
organizational problems.
– Managers perceive business challenges in the environment
– Managers set organizational strategy for responding to business
challenges
– They allocate the human and financial resources to coordinate the
work and achieve success.
– They must exercise responsible leadership
 In addition, managers must act creatively:
– Creation of new products and services
– Occasionally re-creating the organization
 IT can play a powerful role in helping managers design and deliver
new products and services and redirecting and redesigning their
organizations.
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 Dimensions of Information Systems
 Information Technology dimension of information systems
 Computer hardware: physical equipment's
 Computer software: preprogrammed instructions
 Data management technology
 Networking and telecommunications technology
– Networks : links two or more computers
– Internet: connects millions of different networks across the globe
– intranets: are private networks used by corporations
– extranets: are similar to intranets except that they are directed at external
users (like customers and suppliers).
– World Wide Web (WWW): a service provided by the Internet
 IT infrastructure: provides platform that system is built on.
– IT is at the heart of Information Systems.
• While organization and management are important too, it‟s the
technology that enables the systems and the organizations and managers
who use the technology.
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 Contemporary Approaches to Information Systems
 The study of ISs is a multidisciplinary field.
 No single theory or perspective dominates
 The study of IS deals with issues and insights contributed from technical
and behavioral disciplines.
 Technical approach
– Emphasizes mathematical based models to study IS
• The Disciplines that contributes:
– Computer science: concerned with establishing theories of
computability, methods of computation, and methods of efficient data
storage and access.
– Management science: emphasizes the development of models for
decision making and management practices.
– Operations research: for optimizing selected parameters of
organizations, such as transportation, inventory control, and
transaction costs.

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 Contemporary Approaches to Information Systems
 Behavioral approach
• Strategic business integration, design, implementation and utilization
has considered in the IS development and maintenance.
– Sociologists: study ISs with an eye toward how groups and
organizations shape the development of systems.
– Psychologists: study ISs with an interest in how human decision
makers perceive and use formal information.
– Economists: how new ISs change the control and cost structures
within the firm.

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 Contemporary Approaches to Information Systems

 Q: Which of the two major types of approaches find to be most appropriate/accurate?

Why?
 Emphasize that the technical approach does not ignore behavior and the behavioral
approach does not ignore technology, but that they are indeed two distinct
approaches.
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 Contemporary Approaches to Information Systems
 Management Information Systems(MIS)
– MIS deals with behavioral issues as well as technical issues
surrounding the development, use, and impact of information
systems used by managers and employees in the firm.
– It focuses on the use of computer-based information systems in
business firms and government agencies.
– Combines computer science, management science, operations
research and practical orientation with behavioral issues
• MIS is an integrated, user-machine system for providing information
to support operations, management, and decision-making functions in
an organization.

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 Contemporary Approaches to Information Systems
 Sociotechnical view: approach of this course: Laudon & Laudon (MIS,
2012) text book focuses
• In a sociotechnical perspective: optimal organizational performance
achieved by jointly optimizing both social and technical systems used in
production
• Helps avoid purely technological approach
– This helps to avoid the mistaken idea that information systems consist
of computers or technology alone.
• The critical aspect of this view is the balance between technological and
social/behavioral concerns.
– Example: sometimes a lesser form of technology may be the best
option because it is more suited to the personal needs of the
individual.

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THANK YOU!!

Q&A?

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