INFORMATION SYSTEMS

Introduction

Information systems is one such tool to provide information required by the business organization and its
stake holders so that managers can initiate decisions which help growth of the organization.
The organizations are highly dependent on information technology and systems to direct the business. In this
context business managers and professionals rely on a variety of information systems that uses information
technologies.

Concept of data and information

Data consists of raw facts, such as an employee’s name and number of hours worked in week, inventory
part numbers.
Information can be defined as the data which is organized and presented at a time and place so that the
decision maker may take necessary action. Information is the result (product) of processing data that is,
information has meaning and context and it is the basis of decision making.
Concept of a system
A system is composed with set of interrelated components which has a clearly defined boundary and
working together to achieve a common set of objectives by accepting inputs and producing outputs in an
organized transformation process. Thus a system is a group of elements or components joined together to
fulfil certain functions. A system is an assemblage of procedures, processes, methods, routine techniques.

Discuss input, output, and processing units of the following systems: computer system, transportation
system, educational system. (illustrate in a block diagram).

Information system (IS)

An information system has a set of interrelated components that collect (or retrieve), process, store, and
distribute information to support decision making and control in an organization. An information system has
an organized combination of People, Hardware and Software, Communication networks, Data resources and
Policies and procedures.
In other words, an information system is a set of interrelated components that
 Collect/retrieve, process, store, and distribute information to
 Support decision making, coordination, control
 Help managers and workers
 Analyze problems
 Visualize complex subjects
 Create new products
 Not necessarily employ computers
So, information systems store, retrieve, transform, and disseminate information in an organization. The
Information System transforms the input of data resources into an output of information and its products.
The processed data as information shall be used to make decisions.
Why do organizations have (need) information systems?
 to make operations efficient
 for effective management
 to gain a competitive advantage
 to support an organization’s long-term goals
A computer-based information system (CBIS) is an information system that uses computer technology to
perform some or all of its intended tasks. Although not all I.S. are computerized, today most are.
Components of Information Systems
Components of Information Systems are Data, Hardware, Software, Telecommunications and network,
People and Procedures.

Figure: Block diagram an I.S.

The roles of various components of information systems

Data is input that the system takes to produce information

Hardware refers to a computer and its peripheral equipment: input, output and storage devices. Hardware
includes data communication equipment.
Software is a program or collection of programs that enable the hardware to process data.
Database is a collection of related files or tables containing data.
Telecommunications and Network refers to hardware and software that facilitate fast transmission and
reception of text, pictures, sound and animation in the form of electronic data. A network is a connecting
system (wireline or wireless) that permits different computers to share resources.
People are the information systems professionals and users who analyse organisational information needs,
design and construct information systems, write computer programs operate the hardware and maintain
software.
Procedures are rules for achieving optimal and secure operations in data processing. Procedures include
priorities in dispensing software applications and security measures.

Types of information systems

Information Systems may be broadly classified as Operations support systems and Management Support
Systems. They may be further classified as mentioned below.

a. Operations support systems process data generated by business operations. Major categories are:
Transaction processing systems, Process control systems, Office automation systems
 Transaction processing systems (TPS) support the monitoring, collection, storage, and processing of
data from the organization’s basic business transactions, each of which generates data. A transaction is
anything that changes the firm’s database. The TPS collects data continuously, typically in real time, that
is, as soon as the data are generated and it provides the input data for the corporate databases.
  Process control systems monitor and control physical processes. Example: in a petroleum refinery use
sensors to monitor chemical processes

 Office automation systems (OAS) are used to develop documents (word processing and desktop
publishing software), schedule resources (electronic calendars), and communicate (e-mail, voice mail,
videoconferencing, and groupware). OASs typically support the clerical staff, lower and middle
managers, and knowledge workers.

b. Management Support Systems Provide information and support needed for effective decision making
by manager. Major categories are: Management Information System, Decision Support Systems, and
Executive Information System.

 Management Information System (MIS) – is an integrated user-machine system, for providing

information, to support the operations, management, analysis & decision-making functions in an
organization. MIS provides information to the users in the form of reports and output from simulations
by mathematical models. Example: daily sales analysis reports

 Decision Support Systems (DSS) – Provide interactive ad hoc support for decision making. DSS enable
a manager to explore a range of alternatives under a variety of conditions. Example: A what-if-analysis
to determine where to spend advertising money.

 Executive Information System (EIS) – Provide critical information for executives and managers. Its
purpose is to analyse, compare and identify trends to help the strategic direction of the organisation.
Such systems are not designed to solve specific problems, but to tackle a changing array of problems.
Example: easy access to actions of competitors.

Other Categories of IS

Expert Systems – an expert system is a computer program that tries to emulate (imitate) human reasoning.
It does this by combining the knowledge of human experts and then, following a set of rules, it draws
inferences. Provide expert advice and act as consultant to users. An expert system is made up of three parts:
a knowledge base, an inference engine, a user interface.
The knowledge base stores all of the facts, rules and information needed to represent the knowledge of the
expert. The inference engine is the part of the expert system that interprets the rules and facts using
backward and forward chaining to find solutions to user queries. The user interface allows the user to enter
new knowledge and query the system. Example: process monitor, credit application advisor

Knowledge Management Systems – Support creation, organization of business knowledge. Example:

Internet access to best business practices

Strategic Information Systems – Support operations/management processes that provide strategic

product/services for competitive edge. Example: Online stock trading, shipment tracking.
Electronic commerce (e-commerce) – These systems enable organizations to conduct transactions, called
business-to business (B2B) electronic commerce, and customers to conduct transactions with businesses,
called business-to-consumer (B2C) electronic commerce. E-commerce systems typically are Internet-based.