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Information Systems Basic Concepts

Pro.Nivedita Roy, IBS-Gurgaon

The Digital Economy

Refers to an economy
that is based on digital technologies, including digital communication networks, computers, and software.

Also sometimes called the Internet economy, the New economy, or the Web economy.
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Major Business Pressures

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Organizational Framework

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Information Systems
Is an organized set of components for collecting, transmitting and processing data in order to deliver information for action In business firms, this information is necessary for both operations and management Todays organizations cannot be operated or managed effectively without information systems that are built using a range of information technologies
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Information Systems (IS) Collect, process, store, analyze, and disseminate information for a specific purpose.

Information systems are comprised of Inputs (data, instructions) Outputs (reports, calculations) Feedback mechanisms that controls the operation An environment that it works within
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Approaches to Information Systems





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Data and Information

Data Streams of raw facts representing events such as business transactions
Information Clusters of facts that are meaningful and useful to human beings in the processes such as making decisions

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Activities in an Information System





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Capabilities of Information Systems

Fast and accurate data processing, with large capacity

storage and rapid communication between sites Instantaneous access to information Means of coordination Boundary spanning

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Pro.Nivedita Roy, IBS-Gurgaon


Changing Scenario of IS
Electronic commerce Electronic business Digital market

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Electronic Commerce
Internet links buyers, sellers Lower transaction costs

Goods and services advertised, bought, exchanged worldwide Business-to-business transactions increasing

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Electronic Business
Electronic business Executing all the firms business processes with internet technology Intranet Business builds private, secure network based on internet technology Extranet: Extension of intranet to authorized external users
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Attributes of Quality Information

Timeliness Completeness Conciseness Relevance Accuracy Precision Appropriateness of form

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System Concepts
It is an integrated set of components or entities that interact to achieve a particular function or goal. Systems have characteristics such as boundaries, outputs and inputs, methods of converting inputs into outputs, and system interfaces They are composed of interrelated and interdependent subsystems Every system has a boundary that defines its scope of activities Systems may consist of numerous subsystems with elements, interactions and objectives
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Systems and their Environments

The systems environment consists of people, organizations and other systems that supply data to or receive data from the system Open Systems These are the systems that operate in an external environment and exchange information and material with that environment The external environment consists of the activities external to the system boundary with which the system can interact
An open system needs to receive feedback to change and to continue to exist in its Pro.Nivedita Roy, IBS-Gurgaon environment 22

Closed System It is relatively self-contained and does not exchange information with its environment Closed systems do not get the feedback they need from the external environment and so tends to deteriorate

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System feedback A system needs feedback that is an indicator of current performance rates when compared to a set of standards, to do its job With effective feedback, continuing adjustments in the activities of a system can be made to assure that the system achieves its goals Measuring performance against a standard is an effective control mechanism

Pro.Nivedita Roy, IBS-Gurgaon


Systems Entropy This corresponds roughly to chaos or disorder- a state that occurs without maintenance The process of maintaining a system is a process of decreasing entropy or increasing orderliness

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Characteristics of Information Systems

Several different information systems can exist in one organization. A particular information system may be composed of several separate information systems. Information systems are connected by means of electronic networks. Inter organizational information systems involve information flow in two or more organizations. An enterprise wide system or inter organizational information system is composed of large & small computers & hardware connected by different types of networks.

Pro.Nivedita Roy, IBS-Gurgaon

Computer-based Information System

A computer-based information system (CBIS) is an information system that uses computer technology to perform some or all of its intended tasks.

Pro.Nivedita Roy, IBS-Gurgaon


Components of Information Systems

Hardware is a set of devices such as processor, monitor, keyboard, and printer. Software is a set of programs that enable the hardware to process data. Database is a collection of related files, tables, relations, and so on, that stores data. Network is a connecting system that permits the sharing of resources between computers. Procedures are the set of instructions about how to combine the above components. People are those individuals who work with the system or use its output.

Pro.Nivedita Roy, IBS-Gurgaon

Classifications of Information Systems

Information Systems can be classified according to: Organizational Structure Functional Area Support Provided System Architecture Activity Supported

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Classification by Organizational Structure

Departmental information systems
Frequently, an organization uses several application programs in one functional area or department.

Enterprise information systems (EIS).

While a departmental IS is usually related to a functional area, the collection of all departmental applications when combined with other functions applications comprises the enterprise wide information system.

Inter organizational systems.

Some information systems connect several organizations.
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Classification by Functional Area

The Accounting Information System The Finance Information System The Manufacturing (operations/production) Information System The Marketing Information System The Human Resources Management Information System

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Classification by Support Provided

Transaction Processing System (TPS) Management Information System (MIS) Knowledge Management System (KMS) Office Automation System (OAS) Decision Support System (DSS) Enterprise Information System (EIS) Group Support System (GSS) Intelligent Support System (ISS)
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Evolution of Support Systems

Early 1950s Transaction processing system (TPS) Management information systems (MISs) Office automation system (OAS) Decision support system (DSS)
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Late 1960s Early 1970s

Evolution of Support Systems (cont.)

Early 1980s Executive information systems Enterprise information systems (EISs) Group support systems (GSSs) Expert systems (ES) Knowledge management systems (KMS) 1990s Artificial Neural Networks (ANNs)
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Mid- 1980s

Interrelated Support Systems

Transaction Processes MIS DSS Non Computer Support

External Information

Data Warehouse


Non Computer Support Internet, other Computer Support

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Classification by System Architecture

A mainframe-based system. A standalone personal computer (PC).

A distributed or a networked computing system (several variations exist).

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Using Information Technology for Competitive Advantage

Industry level effect: - It changes an industrys : Products and services Production economics Markets Firm level effect: - It affects key competitive forces: Buyers Substitute products Suppliers New entrants Rivals Pro.Nivedita Roy, IBS-Gurgaon 37

Strategic level: - It supports a firms strategy: Low-cost leadership Product differentiation Market specialization

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Framework for Information System

Operational level: These are the day-to-day activities of the firm that involve acquiring and consuming resources Tactical level: Managers review operational activities to make sure goals are met and resources are not wasted Strategic level: Strategic planners address problems that involve long-range analysis and prediction .
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Characteristics of Operational Systems

Repetitiveness Predictability Emphasis on the past Detailed nature Internal origin Structured form Great accuracy
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Characteristics of Tactical Systems

Data are summarized, aggregated or analyzed Variety of reports like summary, exception,
ad-hoc reports are generated

Periodic nature Unexpected findings Comparative nature Summary form Both internal and external sources
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Characteristics of Strategic Planning Systems

Ad-hoc basis: produced regularly or periodically Unexpected information Predictive nature Summary form External data Unstructured format Subjectivity

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Major types of systems in organizations

Executive Support Systems (ESS)

Decision Support Systems (DSS)

Management Information Systems (MIS)

Knowledge Work Systems (KWS)

Office systems

Transaction Processing Systems (TPS)

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Transaction Processing System

These are the basic business systems that serve the operational level It is a computerized system that performs and records the daily routine transactions necessary for the conduct of the business

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Knowledge Work Systems

Knowledge level Inputs: design specifications Processing: modeling Outputs: designs, graphics Users: technical staff and professionals Example: engineering work station

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Management Information System

Management level Inputs: high-volume data Processing: simple models Outputs: summary reports Users: middle managers Example: Annual Budgeting

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Decision Support System (DSS)

Management level Inputs: low-volume data Processing: interactive Outputs: decision analysis Users: professionals, staff Example: contract cost analysis

Pro.Nivedita Roy, IBS-Gurgaon


Executive Support System (ESS)

Strategic level Inputs: aggregate data Processing: interactive Outputs: projections Users: senior managers Example: 5-year operating plan

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Sales and Marketing Systems

Major functions of systems: Sales management, market research, promotion, pricing, new products
Major application systems: Sales order info system, market research system, pricing system

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Manufacturing and Production Systems

Major functions of systems: Scheduling, purchasing, shipping, receiving, engineering, operations
Major application systems: Materials resource planning systems, purchase order control systems, engineering systems, quality control systems
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Pro.Nivedita Roy, IBS-Gurgaon


Financing and Accounting Systems

Major functions of systems: Budgeting, general ledger, billing, cost accounting Major application systems: General ledger, accounts receivable, accounts payable, budgeting, funds management systems

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Human Resource System

Major functions of systems: Personnel records, benefits, compensation, labor relations, training

Major application systems: Payroll, employee records, benefit systems, career path systems, personnel training systems

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Pro.Nivedita Roy, IBS-Gurgaon


Enterprise Applications
Enterprise systems Supply Chain Management Systems Customer Relationship Management Systems Knowledge Management Systems

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Supply Chain Management (SCM)

Close linkage and coordination of activities involved in buying, making, and moving a product Integrates supplier, manufacturer, distributor, and customer logistics time Reduces time, redundant effort, and inventory costs Network of organizations and business processes

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Helps in procurement of materials, transformation of raw materials into intermediate and finished products Helps in distribution of the finished products to customers Includes reverse logistics - returned items flow in the reverse direction from the buyer back to the seller
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Role of IS in SCM
Decide when, what to produce, store, move Rapidly communicate orders Communicate orders, track order status Check inventory availability, monitor levels Track shipments Plan production based on actual demand Rapidly communicate product design change Provide product specifications Share information about defect rates, returns
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Customer Relationship Management

Manages all ways used by firms to deal with existing and potential new customers Business and technology discipline Uses information system to coordinate entire business processes of a firm Provides end-to-end customer care Provides a unified view of customer across the company Consolidates customer data from multiple sources and provides analytical tools for answering questions
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Knowledge Management System

Creating knowledge Discovering and codifying knowledge Sharing knowledge Distributing knowledge

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