CHAPTER ONE

FUNDAMENTALS OF
INFORMATION
SYSTEM
 Chapter I

1.1. Information

•Definition
•Information Hierarchy
•Characteristics of Valuable Information
 Chapter I

1.1.1. Definition of Information

 Data:

 Row facts, figures, numbers, pictures

 Descriptions - things, events, activities and transactions
 no specific meaning: no context or connection
 E.g. 2345, $ 7000
 Information
 Data with meaning
 Processed/ Interpreted/ Analyzed / Calculated/ Compared
 Contextualized data
 Relational Connection
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Data Information

2345, $7000 Withdrawal of $7000 from A/c 2345

Temperature readings of
Global temperature is rising
the world for the last 20
years

Number of visitors to The traffic from US is increasing but that

website by country of Australia is declining
(Google.com/Analytics)

 Data is required to backup our claim or conclusion

(information)
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Information

Tables (frequency distributions).

Graphical representations (histograms,
bar plots, pie-charts).
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When does information become knowledge?

When does knowledge become wisdom?

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1.1.2. Information/knowledge Hierarchy
Wisdom
Understanding
Accumulated K + experience +
principles
Values + Ethics + reasoning =
wise judgment (Why, future,
Context

Novelty)
Knowledge
Understanding
Patterns Contextualized, interpreted,
understood and strategically
applied information (How,
Past/experience)
Information
Data with meaning - relational
Understanding connection, processing,
Relationships contextualization (Who, What,
When, Where – Past/Experience)
Numbers,
symbols, facts –
out of context,
no relation to
Data
other things Understanding
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Data Information Knowledge

(Interpreting &
understanding the
pattern within Inf.)

High humidity, High humidity, 15 F applying it for making

temperature raining prediction
dropping to 15 F

data on people's smoking habits  taking corrective

smoking habits lung cancer measure

100, 5% 100, 5%  Bank decision to increase

saving
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1.1.4. Characteristics of Valuable Information

When do we say that Information is Valuable?

 Accuracy: error free  Reliable: trusted

 Relevance: serve the purpose
 Timeliness: How current
 Completeness: no missing
information
 Accessible: when needed
 Secured: not to be access
by unauthorized users
 Verifiable: check its
correctness
 Simple: without complexity,
inf. overload
What is the role of information in
organization?
 Chapter I

Role of Information:
Decision making and problem solving – the right information
Strategic decision: SWOT analysis – Internal and external position
Forecasting: more accurate
 Validation of actions taken

 Dealing with competitors

5 competitive forces – Threats (new entrants, substitutes);
Bargaining Power (buyers, suppliers); within Industry
Influencing strategies

Customers: needs, perceptions, preferences

The right product or service
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Role (Contd.)
 Suppliers: ability to supply
 dealing: surplus/shortage

 Employees: needs/perspectives; information

seeking (profitability, problems, what others do)
 motivational, engaging
 cross-sectional team

 Etc.
 Chapter I

1.2. System Concept

• Definition of System Concept

• Systems Approach
• System Types
• System Performance Measures
 Chapter I

1.2.1. Definition of System

 An interrelated set of components that work together
within an identifiable boundary to achieve common
objectives (purposes). Systems have:
 Component – One part/group of parts (sub-systems)
 Interrelationships – the function of one component
depends on the function & existence of the other (output
of one – the input for the other)
 Objective/purpose – the main reason for the existence of
a system: set of defined objectives
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Def. (Cont’d.)
 Boundary – Conceptual line drawn around the system
that separates the system from the environment
 What is inside and outside of the system
 scope of operation/functional boundary: what the system
can and cannot do
 Environment – everything outside a system & interact
with a system
 Systems interact with the environment
 Events in the environment affect the system
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Def. (Cont’d.)
 Interface: the points at which two systems, subjects,
organizations, etc. meets and interact (e.g. menu in
computer system)
 set of rules/procedures for how a system interacts (communicates)
with the environment

 Input - whatever the system takes in from the

environment
 Output – whatever returned to the environment
(product/service)
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Def. (Cont’d.)
 Constraints - limits or restrictions to what a
system can accomplish (capacity, resources,
…)
 Feedback: The reaction or response of the
environment to the output is known as feedback.
Feedback is useful in evaluating and improving the
functioning of the system.
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Def. (Cont’d.)
 Large number of Interconnections/Interactions 
Problem  Reduce
 Decomposition: breaking  hierarchical subsystem
(manageable size)  defining boundary & interfaces
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Def. (Cont’d.)
 Simplification: organizing
subsystems
 Clustering: forming a
group
 Decoupling: reducing
direct dependence or the
need for communication
(slack capacity, use of
standards, buffering)
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Def. (Cont’d.)
 Constraints - limits or restrictions (capacity,
resources, …)
 Feedback: The reaction of the environment to the

output
 evaluating and improving the functioning of the system.

 Therefore,

System = C + I + O + B + E + I + I/O + C + F
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Def. (Cont’d.)
The entire system is broken into three parts namely -
input, process and output.
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1.2.2. System Approach/system Theory
 The Systems Approach or Systems Theory is set
of ideas with which we can view systems. This
set of ideas can be summarized as follows:
 All systems are composed of inter-related parts or
sub-systems
 The components form an indissoluble whole – change
in one part affects other parts of the overall system
 Sub-systems need to work towards the goals of the
system (not to their own goals independently)
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Sys. App (Cont’d)

 Holism or synergy: The systems approach takes
the view that the whole is greater than the sum of
the parts
 Mutual interaction adds something more OR
A system as whole has properties that non of the
parts/components/subsystems have OR It can
do something that individual components/
subsystems can not.
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Syst. App. (Cont’d.)

 Structure – hierarchical structure of subsystems

within a given system (a system divided into
subsystem) functioning as a whole to achieve its
objective
 Subsystem: integrated set of components or
subsystems. Different subsystems when combined
together form a system
 Supra System: large system made up of two or more
smaller systems
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Syst. App. (Cont’d.)

School of
Graduate Uni PHEIs MOE
Studies at Uni

Subsystem of Subsystem of Subsystem of

PHEIs MOE Ethiopian Gov.
Subsyste
Supra-system Supra-system Supra-system
m of Uni of SGS at Uni of Uni of Uni
 Chapter I

Syst. App. (Cont’d.)

• A company as an interconnected
purposive system consists of
several business sections working
for a common goal or success

• Each sub-system influence the

other sub-system and the system
as a whole

• Only when all these subsystems

work together, that the system is
said to function effectively.
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Syst. App. (Cont’d.)

 Advantages of Systems approach
 managers have a good view of the organization.
 It gives importance to interdependence of the different parts
of an organization and its environment.
 It forecast consequences and plans action
 Goal oriented
 Disadvantages of Systems Approach
 Does not offer specific tools and techniques for practicing
manager
 It cannot be easily and directly applied to practical problem
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1.2.3. System Types
 Simple vs. Complex
 Simple: easily define system’s output from known inputs;

no need of high level system analysis

 E.g. A college classroom system – Instructors, Students, Text,
Facility – educated citizen

 Complex: Multitude of components and

relationships; processes are not describable with
single rule; unpredictable occurrence of features
from the current specification
 Example: organisms, human brain, social & economic system
 Chapter I
Sys. Typ. (Cont’d)
 Open vs. Closed System
 Open: dynamically interact to their environments
 taking inputs and transforming them into outputs to be distributed
into their environments
 exchange of feedback with its external environment
 analyzed & used for adjusting internal systems & necessary information is
transmitted back to the environment

 E.g. Living Organism, organizations

 Closed: nearly no interaction with and not influenced by the

environment;
 its operation is relatively independent of its environment
 E.g. Dry Battery, Watch
 Chapter I

Sys. Typ. (Contd.)

 Adaptive vs. Non-Adaptive
 Adaptive System – changing behavior based on its
environment; react to what other agents are doing; tailoring the
response based on the problem
 Non-Adaptive System - fail to adopt to the environment;
steady/stable/fixed
 Natural/man-made (solar system/organization)
 Conceptual/physical (social system or theory/production
system)
 Chapter I

1.2.4. System Performance Measures

 Efficiency

A measure of the use of inputs (or resources) to

achieve results.
 Achieved output divided by consumed input

 Effectiveness

 A measure of the extent to which a system achieves

its goals (achieved output divided by expected
output)
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Perfo. Measure (Cont’d)

 Two elements built into the system: Control & Feedback

 System Control:
 Purpose:
 proper operation & achievement of objectives
 conformity with standards
 Steps:
 Standard – expected performance (measurable)
 Measurement – performance (Sensors)
 Comparison – actual with standard (Comparator)
 Reporting deviation
 Corrective actions – adaptations (Input/Process/both)
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Perfo. Measure (Cont’d)

 Feedback
 flow of information from the output back to input
concerning the system's performance.
 Purpose: control and modification of output
 Control system  feedback information
 Types:
 Negative feedback: deviations from standard (to reduce
fluctuations)  self-regulating and self-monitoring system
 Positive feedback: repeat or amplify adjustment or action;
reinforcing the way the system is moving
 Chapter I

1.3. Information system

What is IS?

◦ Definition
◦ Information System Model
 Chapter I

1.3.1. Definition of Information System

 Information system (IS) is the set of interrelated

components of Hardware and Software and formal
procedures by which data are collected, processed,
Stored and distributed to users. IS transforms data
into information.
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Components of IS
Systems analyst, developer,
consultant, IS manager, DB
Administrators,
webmasters, users
Operating
Systems &
Application computer systems,
Software peripherals

communication media,
corresponding hardware
& software, Internet,
Intranet, Extranet
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people who actually use the system to

perform or support their activities

Programs that work with operating system

software to help the computer to do specific
types of work.- Microsoft Word, Excel, etc.

Directs all the activities and sets all the

rules for how the hardware and software
will work together.- Microsoft Windows;
Google’s Android, Apple iOS,

Computers, keyboards, disk drives, iPads,

and flash drives, communication networks

Software is any set of instructions that tells the hardware what to do or

how to accomplish each task (Operating System & Applications SW)
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 Business information system:

 Input – data & instruction
 Source – data files,

 Process – Data are manipulated into information using mathematical,

statistical, and other tools
 Calculate, Compare, Sort, Classify, Summarize

 Output – Reports, Message, Forms, Graphic Images, etc.

 Storage – databases, devices
 Control of system performance
 Monitoring & Evaluating feedback
 Example: ATMs, airline reservation systems, Registrar systems,
HRIS, FMIS, CRM, SCM
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1.3.2. Information System Model

The information system model expresses a

fundamental conceptual framework for the
major components and activities of
information systems.
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IS Model (Cont’d)
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Exercise:
 Make a list of the different information systems
you interact with every day.
 Identify the technologies (HW, SW), Input used,
the processes involved and type of outputs.
 Chapter I – Introduction

THE END