A2 - 1 Information Systems For Business Organizations

IS1060 : Introduction to Information Systems
Part A : Concepts & Roles of Information Systems
A2
Information Systems for
Business Organizations
Copyright © 2022 Por Hau Joo IS1060_V16_A2: Information Systems for Business Organizations 1/41
Prerequisite Readings & Lesson Objectives
 Prerequisite readings:
 Subject Guide | Sections 8.1 and 8.2 of Chapter 8: What do information systems
do?
 Subject Guide | Section 9.2 of Chapter 9: Enterprise scale: architecture and

information systems
 Subject Guide | Sections 10.1 and 10.2 of Chapter 10: Governance of information
systems
 At the end of this lesson, you will understand/learn:

 Concepts, objectives, target levels and users, characteristics and criteria for
measuring quality and success of Transaction Processing Systems (TPS),
Management Information Systems (MIS) and Decision Support Systems (DSS)
 Supply chain for a large enterprise and the challenges in managing the supply chain
 Governance of information systems
Interdependence Between Information Systems
& Business Organizations
Information systems are the foundation

for operating a business today.
Business processes and

operations have been
transformed drastically
by the use of ICT.
There is growing interdependence between a firm’s information systems and its business
capabilities. Changes in business strategies, rules and processes increasingly require
changes in hardware, software, telecommunications and databases. Often, what an
organization would like to do depends on what its systems will permit it to do.
Levels & Types of Business Information Systems
Different types of information systems are developed and deployed in an organization,
not all at once but over the years, possibly on different hardware and software platforms.
1 Transaction Processing Systems (TPS)
Key Issues:
An exchange between buyer and seller
G
1) What is a business transaction? Who are involved? What data are
captured during a transaction?
2) What is a TPS? Why TPSs are needed? Who are the target users?
3) What are the distinctive characteristics of a TPS?
4) What criteria would you use to measure the quality and success of
a TPS?
Objectives & Target Users of a TPS
 Designed to support day-to-day processing of business transactions of an

organization, with none or only minimal help from operation staffs
E.g buying movie tickets online or at physical cashier
 Targeted mostly at customers and front-end operation staffs (e.g. cashiers,
sales clerks, bank staffs) at the operational level of the organization structure
 When a business transaction is executed, data relevant to the transaction are

collected, processed and kept by the TPS in a database e. g. shopee saves payment
details for future transactions
 Transaction data may include date, time, location, products and quantities
ordered, payment details, user/customer details, computed totals, etc.
 Transaction processing involves input data validation, data manipulation and

computation, storage and update of relevant records into the database, and
generating useful output data/information to the users
 Aim to capture and process all data relevant to the business transactions in a
fast, complete, reliable and secured manner
Examples of TPSs in Singapore
Discuss the environment, purpose, target users and transaction data of the following TPSs:
3+ millions users, 120+ stations
4+ millions customers, 1000+ ATMs 1+ millions vehicles, 90+ gantries
Characteristics of a TPS
 Many concurrent users →used by many users simultaneously, especially

during peak hours (may be hundreds to thousands of users at the same time)
 High throughput → handle very large number of transactions, especially

during peak hours (may be thousands of transactions per second)
 High speed processing → must complete the processing of every transaction

within seconds (below 3 seconds)
 High reliability and data integrity → must process every transaction reliably
and fully, commit all updates, and ensure integrity of all the data and their
relationships in the database
 High security and audit trail → accessible only by authorized users, all actions
like login, access, before/after images of data and logout are recorded
 Fault tolerance → may incorporate comprehensive safeguards and disaster

recovery functions to minimize impact of hardware or software failure
Criteria for Measuring Quality & Success of a TPS
 High throughput and high speed processing → able to handle large number
of concurrent users and high number of transactions during peak hours, able
to complete every transaction within 3 seconds
 High reliability and data integrity → able to process every transaction reliably
and fully, able to commit or backout updates to ensure integrity of all data and
their relationships in the database under all circumstances
 Adequate access control and security protection → able to control and

restrict access (only to authorized users), able to protect the system and its
data from unauthorized access or modification
 User friendly → able to provide a simple and well designed user interface for
transaction processing, especially when it is for use by customers
 Reliable payment mechanism → able to provide a trusted mechanism for

settlement of payments, especially when it is Internet-based
Self-Learning
Learning Video:
1) Transaction Processing
https://youtu.be/-lGQ98DWNqs (30:03)
Further Reading:
1) Roles of Information Systems in Modern Organizations
https://www.ukessays.com/essays/information-technology/roles-of-
information-systems-in-modern-organizations-information-technology-
essay.php
2) TPS: Transaction Processing Systems

http://www.bestpricecomputers.co.uk/glossary/transaction-processing-
systems.htm
2 Management Information Systems (MIS)
Key Issus:
1) Why a manager needs information? What information is useful to

managers? How can such information be made available?
2) What is a MIS? Why MISs are needed? Who are the target users?
3) What are the distinctive characteristics of a MIS?
a MIS?
Objectives & Target Users of a MIS
 Designed to support the monitoring, control and management of the business

operations handled by a functional area
 Targeted at middle managers at the management level of the organization
structure
 In order to manage the operations of a functional area efficiently and
effectively, a manager needs complete, timely and accurate information
 Transaction data captured and stored in TPS databases are selected, processed and
used to generate useful and valuable information
 Daily, monthly, quarterly, yearly, comparative, exception and/or other reports or
charts are produced to show underlying status and performance of the business
 Generated information are normally stored into a MIS database, accessible by

middle managers via a functional user interface with powerful features
 Aim to process large amount of transaction data to derive specific, meaningful
and valuable information that can be used by managers for making business
and operation related decisions
Example of an MIS
Summary Reports
Routine Reports
Drill-Down Reports
Key Indicator Report
Comparative Reports
Exception Reports
Data collected by a TPS are processed into information and stored into a MIS
database at the end of a day, week and/or month, so that managers can access
and view the information in the form of reports and/or dashboards
Characteristics of a MIS
 Few users → used only by authorized middle managers within an organization
 Process large amount of transaction data → large amount of data stored in

TPS databases are periodically selected, processed and summarized into
information needed by managers – processing time may run into hours
 Generate useful and specific reports/charts → daily, monthly, quarterly,

yearly, comparative, exception and/or other management reports or charts
are generated to show underlying status and performance of the business
 Sophisticated user interface → a friendly but powerful user interface for

managers to search, retrieve and navigate information in the MIS database
(e.g. zoom in/out or drill-down/up from high-level summaries to low-level
details and vice versa, and access to multi-dimensional views of data)
 Act as a business intelligence system → provide current, timely and relevant

information for managers to make intelligent and business focused decisions
Criteria for Measuring Quality & Success of a MIS
 Relevant, accurate, complete and timely information

 Able to provide high quality information to support managers in monitoring the
business and in making key operational decisions
 Variety of management information

 Able to provide a variety of reports/charts that can present different views and
dimensions of the underlying status and performance of the businesses
 Sophisticated user interface

 Able to provide a friendly yet dynamic and powerful user interface for managers
to search, retrieve and navigate information in the MIS database, with advanced
features for zoom in/out or drill down/up, comparison, sorting, charting, etc.
 Information integration for business intelligence

 Able to process transaction data collected by the TPSs operating in the different
functional areas and generate integrated and real time information for the
managers of the different functional areas, so as to assist them in managing and
coordinating business operations and in making intelligent decisions
Self-Learning
Learning Video:
1) Management Information System
https://youtu.be/-18Py3sX5sM (27:52)
Further Reading:
1) Role, Impact and Importance of MIS
https://www.linkedin.com/pulse/20140901121616-270946654-role-impact-
and-importance-of-mis
3 Decision Support Systems (DSS)
Key Issues:
1) What are some of the decisions made by managers at the different

management levels in a business organization?
2) What is a DSS? Why DSSs are useful? Who are the target users?
3) What are the fundamental principles behind the concept of a

DSS?
4) What are the distinctive characteristics of a DSS?
a DSS?
Types of Decisions at Management Levels
There are no known rules to

making decisions. All based on
their experience and knowledge
Easy to make
decisions as
there is rules to
deciding. E.g
overtime
eligibility. Know
how much to pay
worker
Objectives, Target Users & Concept of a DSS
 Designed to assist users in decision making processes
 Targeted at middle managers at the management level of the organization

structure, or to empower authorized non-managerial personnel at the
operational level with decision support DSS helps to give information and recommendation to non-
managerial workers so that they can make decision in manager’s
stead
 Rely on an analytical/problem solving model to support users in decision

making processes
 For problems involving structured decisions, a simple model that incorporates
established rules and procedures may be used (e.g. using decision tables)
 For problems involving semi or unstructured decisions, a complex model will be
needed (e.g. using financial, mathematical, statistical, forecasting or other models)
 Require special software that can analyze and compare data, make inference
and recommend actions/decisions (e.g. spreadsheet software, OLAP (Online
Analytical Processing) and data mining tools, intelligent techniques, etc.)
Example of a DSS
Voyage-Estimating
Decision Support System
This DSS operates on a

powerful PC and it is used
daily by managers to develop
the cheapest or fastest bids
for shipping contracts.
Copyright © 2014 Pearson Education
Fundamental Principles Behind the Concept of a DSS
 An analytical/problem solving model must be established within the DSS to

represent the components or relationships of a phenomenon for making
decisions, i.e. a model of the problem and its derivable actions and decisions
 Relevant data and/or parameters may be incorporated and/or inputted into
the model for solving the problem
 A special software that can analyze/evaluate the data and their relationships
in the model and then arriving at an action or recommendation is required
 A user interface is required, to allow the users to interact with the system,
inputting data and/or interrogating the model:
 Select options and/or scenarios
 Input relevant data and/or parameters
 Perform What If analysis
 Present outcomes or recommendations
 Ultimately, the final decision lies with the users, not the system
Key Components of a DSS - 1
 Analytical/Problem Solving Model
 A model for solving a specific domain problem → domain knowledge is required
 It represents the components or relationships of a phenomenon, such as:

 Certain conditions will imply the need for specific actions (e.g. rules, procedures, models)
 Recommendation is dependent on outcome of the evaluation of certain situations
 May be a financial, statistical, mathematical, forecasting or other model, or simply

a set of decision tables designed to support the decision making processes
 Special Software
 For analyzing and comparing data, and to infer and recommend action(s) or
decision(s) without the need to rely on complex programming
 May be OLAP (Online Analytical Processing) tools, data mining tools, artificial
intelligence software or techniques, or simply a spreadsheet software
Key Components of a DSS - 2
 DSS Database
 A repository for storing current and/or historical data extracted from other systems
→ data that are required for decision support
 May be data defined in the worksheet(s) of a spreadsheet, e.g. decision tables
 May be extracts or copies of data from TPS and/or MIS databases, so that the DSS
does not interfere with the operation of the TPSs and MISs
 May be a small database containing subset of corporate data downloaded from

internal or external data sources, or a massive data warehouse that is continuously
updated with data from TPS, MIS or other systems
 Friendly User Interface

 For users to select options, input data/parameters, interrogate the model or
evaluate scenarios
 For presenting possible outcomes or providing recommendations to the users
Characteristics of DSS - 1
 Few users → used by middle managers or to empower authorized non-

managerial staffs in decision making processes
Note: For non-managerial staffs, the DSS is mostly used for supporting them in
structured decision making processes, so that a manager’s involvement is not
required
 Rely on an analytical/problem solving model → in order to assist users in

decision making processes, an analytical/problem solving model must be
established, which represents the components or relationships of the
phenomenon for making decisions
 Rely on use of special software → in order to make inference and to arrive at

a recommendation, a special software that can analyze/evaluate data and
their relationships in the model is required
 Rely on data from TPS, MIS and/or external sources → may require extracts
or copies of data from TPS and/or MIS databases, or data from external
sources, such as data from suppliers, government regulators, banks, etc.
Characteristics of DSS - 2
 Friendly user interface → in order to assist users in decision support, the

users must be able to interact with the system → to input data/parameters,
to state preferences, and to view the suggested actions or recommendations
 A DSS normally does not solve problems by itself, it needs to involve the users
 Through the user-interface, a user can explore or investigate different scenarios of

a problem by interacting with the model and providing data/parameters
 Output from the DSS may be used by the users to make final decisions
 In some cases, output from the DSS is the recommended decision (e.g. an expert
system)
 Act as a business intelligence system → can provide fast, valuable, consistent

and timely recommendations to assist users in making intelligent decisions
Different types of DSS can be developed, such as data-driven,
model-driven, knowledge-driven or spreadsheet-based DSS.
Criteria for Measuring Quality & Success of a DSS
 Quality of the analytical/problem solving model

 Able to provide a functional, worthy, useful, relevant and comprehensive analytical
and problem solving model that can truly address a decision support problem
 Power of the special software

 The software is able to analyze or evaluate data and their relationships in a model
to address a domain problem and make objective inferences
 Relevance of the recommended solution

 Able to present appropriate, logical and sensible recommendations for solving
problems
 Friendliness of the user interface

 Able to provide a well designed user interface that truly mimics the way a problem
is addressed by a user, and allowing a decision to be made after ‘consultation’ (e.g.
allowing users to enter data/parameters, interrogate the model, evaluate scenarios,
before presenting outcomes/recommendations)
Self-Learning
Learning Video:
1) Decision Support Systems
https://youtu.be/MaGqDqBH4yc (31:51)
Further Reading:
1) Decision Support Systems: Sifting Data for Better Business
Decisions
https://www.cio.com/article/193521/decision-support-systems-sifting-data-
for-better-business-decisions.html
4 Challenges for Large Enterprises
Key Issues:
1) What is a cross-functional business process? Why such process is

complex?
2) What is a supply chain? What are the challenges and problems in

a supply chain?
3) Why sharing critical data and information timely in a supply

chain is important?
4) Why sharing critical data and information across the different

information systems used in a supply chain is not a simple matter
for a large enterprise?
Cross-Functional Business Processes
 A process that spans across functional boundaries, i.e. not confined to a single
functional area
 Where work activities flow across different functional areas and performed by
different people in the different functional areas
 To be smooth and effective, the work activities must be managed and coordinated
 A large enterprise has

many such complex Order Fulfillment
Process
business processes
 Sharing key data across

functional areas in a
timely manner is
critical for ensuring
smooth and efficient
operations and for
minimizing cost costs
Supply Chain of a Large Enterprise
It is about planning, coordinating, controlling and managing complex and cross-

functional business processes in the most cost effective and efficient manners
Upstream: where sourcing & procurement,
inbound logistics & warehousing activities occur
Internal: where
manufacturing,
assembly,
packaging &
storage occur
Downstream: where outbound logistics, distribution, marketing

& sales, and customer services occur
The Sectors of a Supply Chain
 Upstream - involving timely procurement and careful management of the flow

of raw materials from suppliers to warehouses
 Internal - involving transformation of raw materials into intermediate or

finished products through manufacturing, assembly, packaging and storage
processes
 Downstream - involving distribution, retailing, sales and services of finished

products to customers
 A supply chain is complex because it involves many cross-functional business

processes internally as well as with external parties
To produce goods to meet customer demands timely, a supply chain must be

managed smoothly and the parties involved must coordinate their activities closely.
Not only raw materials but also data, information and payments flow through the
supply chain in both directions – from supply to demand and vice versa.
Nike’s Supply Chain
To coordinate the activities involved in purchasing, production and distribution

of products, information flows upstream and downstream in Nike’s supply chain.
Common Problems in a Supply Chain
 A major change at one point in a supply chain may not be known immediately
by other points in the supply chain, due to human, systems and/or operational
problems or limitations, such as:
1) Insufficient raw materials to meet production schedules for large orders due to
sudden increase in demand and/or sudden shortage or delay in supply
2) Sudden or unexpected increase in prices of raw materials
3) Over stocking of products in warehouse due to poor sales or inaccurate demand
forecast
4) Late delivery of products to customers due to weak linkage and rapport with
customers and suppliers
5) Problems or difficulties in sharing critical data/status due to incompatible internal
systems, external systems or technical issues
 Sharing critical data/information among the parties is a big challenge, due to different
information systems operating in the different functional areas and suppliers, especially
when different hardware and software platforms are used by the systems
Islands of Information Systems in a Large Enterprise
Sales & The Enterprise

Marketing Manufacturing
Systems & Planning
Systems
Financial &
Accounting HR Admin & Staff
Systems Development Systems
Suppliers’
Systems e-Commerce’s
Systems
Suppliers
Customers
The challenge for a large enterprise is how to coordinate the complex business processes
and integrate them for operational excellence and efficient management of internal and
external resources and services
1) What, when and how to share critical data/information in a supply chain?
2) How to integrate critical data/information from the diverse information systems so
that complex and cross-functional business processes can be synchronized?
3) How to manage so many suppliers, distributors and customers in a supply chain?
4) How to respond quickly to changes in the environment? How to manage the impact?
Enterprise-Wide Applications for the Digital Age
 These are information systems that specialized in managing core and complex
business processes across functional areas in a supply chain
 Aim is to enhance business operations by better integration and coordination

of core business processes, by timely sharing of critical data/information
 Ultimate goals: to improve management and operation of the supply chain

1) Improve efficiency, effectiveness and productivity in the way core and cross-
functional business processes are carried out
2) Reduce wastage, costs and increase competitiveness
 They are special breed of information systems for large enterprises, designed
specially to improve operational excellence and decision making
 Enterprise Resource Planning (ERP) systems Exam qns topics
 Customer Relationship Management (CRM) systems

 Knowledge Management (KM) systems
 Supply Chain Management (SCM) systems
Self-Learning
Learning Video:
1) What is Supply Chain Management?
https://youtu.be/5N1nA3pue_k (2:18)
Further Reading:
1) Supply Chain Management (SCM)
https://www.investopedia.com/terms/s/scm.asp
5 Governance of Information Systems
Key Issues:
1) What is ICT infrastructure?
2) What would be the structure of an information services
department? How does it fit in an organization structure?
3) Who are the key executives in the department? What are their
roles and responsibilities?
ICT Infrastructure
 Every organization invests in building and improving its ICT infrastructure, which is the
foundation for operating business processes using ICT, so as to support employees in
their works, in serving customers, and in coordinating with suppliers
 Consist of hardware, communication networks, software, people and services:

 Computing platforms → mainframes, minis, desktops and laptops, mobile devices, and/or
cloud computing services for data processing
 Telecommunication networks → data, voice and/or video connectivity for employees,
customers and suppliers
 System software → system tools and operating systems for the various computing platforms
 Application software → TPS, MIS, DSS and/or enterprise applications, including application
development tools
 Data management software → data storage, data access, data processing and analysis
 ICT facility management → installations, operations, backup, recovery and security
 IS project management → planning, coordinating, accounting and managing IS projects and
expenditure
 ICT standards → standards and policies for all ICT acquisitions and deployment
 ICT education, research and development → training, exploring and experimenting
Structure of an Information Service Department
Typically, the CIO reports Chief Executive Officer (CEO)

to the COO. But depending
on the organization, the
CIO may report to the CFO Chief Operating Officer (COO)
or the CEO directly.
Vice President (VP)
Others
Human Resource
Chief Finance Officer Chief Information Vice President (VP)

Vice President (VP) ...
(CFO) Officer (CIO) Manufacturing & Others
Sales & Marketing
Accounting & Finance Information Services Production
These are managed Data Database

... Others
Administration Administration
by Senior Managers
ICT Systems Systems Enterprise Outsourcing ... Others

Infrastructure Operations Development Applications Relations
General Responsibilities of the Key Executives
 Chief Information Officer (CIO)

 Oversees the strategies, investments, deployment and application of ICT for the
organization
 Other key positions that might be necessary for a large enterprise

 Chief Security Officer (CSO) → in charge of information systems security, keeping
management aware of security threats, responsible for enforcing information
security policy and maintaining and implementing information security tools and
policies
 Chief Privacy Officer (CPO) → responsible for ensuring the organization complies
with the personal data protection laws and regulations established by the
government and the rules and policies established within the organization
 Chief Knowledge Officer (CKO) → in charge of knowledge management program,

responsible for enforcing knowledge management processes to identify, capture,
document, manage and control the sharing and application of knowledge and
knowledge-based products produced by the organization
Self-Learning
Learning Video:
1) What is IT Governance?
https://youtu.be/5U5f17vO1Y0 (3:14)
Further Reading:
1) The Information System Department
http://misit-corner.blogspot.com/2017/02/the-information-system-
department.html
2) IT Branch – Function Chart

https://pmotechniques.wordpress.com/2008/02/06/it-branch-function-chart/

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IS1060 : Introduction to Information Systems

Part A : Concepts & Roles of Information Systems

 Subject Guide | Section 9.2 of Chapter 9: Enterprise scale: architecture and

 At the end of this lesson, you will understand/learn:

 Governance of information systems

Information systems are the foundation

Business processes and

3) What are the distinctive characteristics of a TPS?

 Designed to support day-to-day processing of business transactions of an

 When a business transaction is executed, data relevant to the transaction are

 Transaction processing involves input data validation, data manipulation and

3+ millions users, 120+ stations

4+ millions customers, 1000+ ATMs 1+ millions vehicles, 90+ gantries

 Many concurrent users →used by many users simultaneously, especially

 High throughput → handle very large number of transactions, especially

 High speed processing → must complete the processing of every transaction

 Fault tolerance → may incorporate comprehensive safeguards and disaster

 Adequate access control and security protection → able to control and

 Reliable payment mechanism → able to provide a trusted mechanism for

2) TPS: Transaction Processing Systems

1) Why a manager needs information? What information is useful to

3) What are the distinctive characteristics of a MIS?

 Designed to support the monitoring, control and management of the business

 Generated information are normally stored into a MIS database, accessible by

 Few users → used only by authorized middle managers within an organization

 Process large amount of transaction data → large amount of data stored in

 Generate useful and specific reports/charts → daily, monthly, quarterly,

 Sophisticated user interface → a friendly but powerful user interface for

 Act as a business intelligence system → provide current, timely and relevant

 Relevant, accurate, complete and timely information

 Variety of management information

 Sophisticated user interface

 Information integration for business intelligence

1) What are some of the decisions made by managers at the different

3) What are the fundamental principles behind the concept of a

4) What are the distinctive characteristics of a DSS?

There are no known rules to

 Designed to assist users in decision making processes

 Targeted at middle managers at the management level of the organization

 Rely on an analytical/problem solving model to support users in decision

This DSS operates on a

 An analytical/problem solving model must be established within the DSS to

 Analytical/Problem Solving Model

 A model for solving a specific domain problem → domain knowledge is required

 It represents the components or relationships of a phenomenon, such as:

 May be a financial, statistical, mathematical, forecasting or other model, or simply

 May be data defined in the worksheet(s) of a spreadsheet, e.g. decision tables

 May be a small database containing subset of corporate data downloaded from

 Friendly User Interface

 For presenting possible outcomes or providing recommendations to the users

 Few users → used by middle managers or to empower authorized non-

 Rely on an analytical/problem solving model → in order to assist users in

 Rely on use of special software → in order to make inference and to arrive at

 Friendly user interface → in order to assist users in decision support, the

 Through the user-interface, a user can explore or investigate different scenarios of

 Act as a business intelligence system → can provide fast, valuable, consistent

 Quality of the analytical/problem solving model

 Power of the special software

 Relevance of the recommended solution

 Friendliness of the user interface

1) What is a cross-functional business process? Why such process is

2) What is a supply chain? What are the challenges and problems in

3) Why sharing critical data and information timely in a supply