INFORMATION

SYSTEMS
Definitions and Components
 What Is an Information System?
Information system - has been defined in terms of two perspectives:
one relating to its function; the other relating to its structure.
From a functional perspective; an information system is a technologically
implemented medium for the purpose of recording, storing, and disseminating
linguistic expressions as well as for the supporting of inference making.
From a structural perspective; an information system consists of a collection of
people, processes, data, models, technology and partly formalized language,
forming a cohesive structure which serves some organizational purpose or function.
The functional definition has its merits in focusing on what actual users - from a
conceptual point of view- do with the information system while using it. They
communicate with experts to solve a particular problem.
 The structural definition makes clear that IS are socio-technical systems, i.e., systems consisting
of humans, behavior rules, and conceptual and technical artifacts.
An information system can be defined technically as a set of interrelated components that collect
(or retrieve), process, store, and distribute information to support decision making and control in an
organization. In addition to supporting decision making, coordination, and control, information systems
may also help managers and workers analyze problems, visualize complex subjects, and create new
products.
Three activities in an information system produce the information that organizations need to
make decisions, control operations, analyze problems, and create new products or services. These
activities are input, processing, and output.
1. Input captures or collects raw data from within the organization or from its external environment.
2. Processing converts this raw input into a more meaningful form.
3. Output transfers the processed information to the people who will use it or to the activities for which
it will be used.
Information systems also require feedback, which is output that is returned to appropriate
members of the organization to help them evaluate or correct the input stage.
 “Information system (IS) can be defined technically as a set of interrelated
components that collect, process, store, and distribute information to support
decision making and control in an organization.”

 “Information systems are combinations of hardware, software, and

telecommunications networks that people build and use to collect, create,
and distribute useful data, typically in organizational settings.”[2]

 “Information systems are interrelated components working together to

collect, process, store, and disseminate information to support decision
making, coordination, control, analysis, and visualization in an
organization.”[3]
 What Is A 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. Such a system can include as little as a personal computer and software.
Or it may include several thousand computers of various sizes with hundreds
of printers, plotters, and other devices, as well as communication networks
(wire-line and wireless) and databases.
In most cases an information system also includes people. The basic
components of information systems are listed below. Note that not every
system includes all these components.
 Components of Information Systems
1. Resources of people: (end users and IS specialists, system analyst,
programmers, data administrators etc.).
2. Hardware: (Physical computer equipments and associate device, machines
and media).
3. Software: (programs and procedures).
4. Databases: (data and knowledge bases), and
5. Networks: (communications media and network support).
1. People Resources
• End users: (also called users or clients) are people who use an information
system or the information it produces. They can be accountants, salespersons,
engineers, clerks, customers, or managers. Most of us are information system end
users.
• IS Specialists: people who actually develop and operate information systems.
They include systems analysts, programmers, testers, computer operators, and
other managerial, technical, and clerical IS personnel. Briefly, systems analysts
design information systems based on the information requirements of end uses,
programmers prepare computer programs based on the specifications of systems
analysts, and computer operators operate large computer systems.
2. Hardware Resources
Hardware is the tangible, physical portion of an information system – the
part you can touch. Computers, keyboards, disk drives, and flash drives are all
examples of information systems hardware. How these hardware components
function and work together.
• Machines: as computers and other equipment along with all data media, objects on
which data is recorded and saved.
• Computer systems: consist of variety of interconnected peripheral devices.
Examples are microcomputer systems, midrange computer systems, and large
computer systems.
 3. Software Resources
Software comprises the set of instructions that tell the hardware what to do. Software is not tangible – it
cannot be touched. Programmers create software by typing a series of instructions telling the hardware what to
do. Two main categories of software are: Operating Systems and Application Software.
Software Resources includes all sets of information processing instructions. This generic concept of software
includes not only the programs, which direct and control computers but also the sets of information processing
(procedures). Software Resources includes:
1. Operating Systems software provides the interface between the hardware and the Application software.
Examples of operating systems for a personal computer include Microsoft Windows and Ubuntu Linux.
The mobile phone operating system market is dominated by Google Android and Apple iOS.
2. Application software allows the user to perform tasks such as creating documents, recording data in a
spreadsheet, or messaging a friend. There are programs that direct processing for a particular use of
computers by end users.
3. Procedures, which are operating instructions for the people, who will use an information system.
Examples are instructions for filling out a paper form or using a particular software package.
4. Data Resources
Data resources include data (which is raw material of information systems) and
database. Data can take many forms, including traditional alphanumeric data,
composed of numbers and alphabetical and other characters that describe business
transactions and other events and entities. Text data, consisting of sentences and
paragraphs used in written communications; image data, such as graphic shapes and
figures; and audio data, the human voice and other sounds, are also important forms
of data. Data resources must meet the following criteria:
• Comprehensiveness: means that all the data about the subject are actually present in the
database.
• Non-redundancy: means that each individual piece of data exists only once in the database.
• Appropriate structure: means that the data are stored in such a way as to minimize the cost
of expected processing and storage.
The data resources of IS are typically organized into:

o Processed and organized data-Databases.

o Knowledge in a variety of forms such as facts, rules, and case
examples about successful business practices.
5. Network Resources
Telecommunications networks like the Internet, intranets, and extranets have
become essential to the successful operations of all types of organizations and their
computer-based information systems.
Telecommunications networks consist of computers, communications
processors, and other devices interconnected by communications media and
controlled by communications software.
The concept of Network Resources emphasizes that communications networks
are a fundamental resource component of all information systems.
Network resources include:

• Communications media: such as twisted pair wire, coaxial cable, fiber-optic

cable, microwave systems, and communication satellite systems.

• Network support: This generic category includes all of the people, hardware,
software, and data resources that directly support the operation and use of a
communications network. Examples include communications control software
such as network operating systems and Internet packages.
 Difference between Computers and
Information Systems
Computers provide effective and efficient ways of processing data, and
they are a necessary part of an information system.
An IS, however, involves much more than just computers. The
successful application of an IS requires an understanding of the business and
its environment that is supported by the IS.
For example, to build an IS that supports transactions executed on the
New York Stock Exchange, it is necessary to understand the procedures related
to buying and selling stocks, bonds, options, and so on, including irregular
demands made on the system, as well as all related government regulations.
 In learning about information systems, it is therefore not sufficient just
to learn about computers. Computers are only one part of a complex system
that must be designed, operated, and maintained. A public transportation
system in a city provides an analogy. Buses are a necessary ingredient of the
system, but more is needed.
Designing the bus routes, bus stops, different schedules, and so on
requires considerable understanding of customer demand, traffic patterns, city
regulations, safety requirements, and the like. Computers, like buses, are only
one component in a complex system.
 Information Technology and Information
Systems
Information technology broadly defined as the collection of computer
systems used by an organization. Information technology, in its narrow definition,
refers to the technological side of an information system. It includes the
hardware, software, databases, networks, and other electronic devices. It can be
viewed as a subsystem of an information system. Sometimes, though, the term
information technology is also used interchangeably with information system.
The term IT in its broadest sense used to describe an organization’s
collection of information systems, their users, and the management that oversees
them.
 Types of Information Systems
Organizations employ several types of information systems. These include:
1. Transaction Processing Systems (TPS)
2. Management Reporting Systems (MRS)
3. Decision Support Systems (DSS)
4. Executive Information Systems (ESS)
5. Office Information Systems (OIS)
6. Professional Support Systems
1. Transaction Processing Systems (TPS)

Transaction processing systems today generally work in on-line mode by

immediately processing a firm's business transactions. A Transaction is an elementary
activity conducted during business operations.

TPS may work either in batch mode, processing accumulated transactions at a

single time later on, or in on-line mode, processing incoming transactions
immediately. Today, most TPS work in the on-line mode.

Examples of typical transactions include billing clients, bank deposits, new

hire data, inventory counts, or a record of client-customer relationship management
data.
2. Management Reporting Systems (MRS)

The objective of management reporting systems is to provide routine

information to managers. Managers receive performance reports within their
specific areas of responsibility. Generally, these reports provide internal information
rather than spanning corporate boundaries.

They report on the past and the present, rather than projecting the future.
In order to prevent information overloads, managers may resort to using demand or
exception reports. Demand reports are requested when needed. Exception reports
are produced only when preestablished out-of-bounds conditions occur and contain
only the information regarding these conditions.
3. Decision Support Systems (DSS)

It explains the structure of a decision support system. Decision support systems

directly support a decision-making session. These systems facilitate a dialog between
the user, who is considering alternative problem solutions, and the system that provides
built-in models and access to databases.

The DSS databases are often extracts from the general databases of the
enterprise or from external databases. Decision models are programmed into the IS to
analyze and summarize large quantities of information and put it into a visual that
makes it understandable.

Because a DSS is interactive, management can easily add or delete data and ask
important questions. This provides the evidence required for mid-management to make
the right choices that will ensure the company meets its targets.
4. Executive Information Systems (EIS)

Executive information systems support top managers with conveniently

displayed summarized information, customized for them. They make a variety
of internal and external information readily available in a highly summarized and
convenient form. EIS are used to:

1. Monitor the performance of the organization

2. Assess the business environment
3. Develop strategic directions for the company's future
5. Office Information Systems (OIS)
The main objective of OIS is to facilitate communication between the
members of an organization and between the organization and its environment.
OIS are used to:
1. Help manage documents represented in an electronic format
2. Handle messages, such as electronic mail, facsimile, and voice mail
3. Facilitate teleconferencing and electronic meetings
4. Facilitate the use of the Internet for communication and access to information
5. Facilitate the use of task-oriented teams through the use of groupware
Professional Support Systems
6. Professional Support Systems (PSS)

Professional support systems help in tasks specific to various

professions. As both organizational and individual experience with information
systems grow, more and more specialized categories of professional support
systems emerge.
 Expert Systems in Information Systems

Expert systems are system that employs knowledge about its application
domain and uses an inferencing (reason) procedure to solve problems that would
otherwise require human competence or expertise.

The essential component of the knowledge base is heuristics - informal,

judgemental elements of knowledge within the expert system's domain, such as oil
exploration or stock valuation. The knowledge base is developed by working with
domain specialists. It is further enhanced as the system is used.
 Supporting Managers with Information Systems:

A variety of information systems support managers as they play their

interpersonal, informational, and decisional roles.

The three management-oriented types of systems (management reporting

systems, decision support systems, and executive information systems) provide
different kinds of support to the three levels of management:

1. Strategic
2. Tactical
3. Operational
 What Managers Do and How Information Systems Can Help

The fundamental functions of management include:

1. Planning establishing goals and selecting the actions needed to achieve them
over a specific period of time.

2. Controlling measuring performance against the planned objectives and initiating

corrective action, if needed.

3. Leadership including the people in the organization to contribute to its goals.

4. Organizing establishing and staffing an organizational structure for performing

business activities.
Mintzberg classified all managerial activities into ten roles falling into three
categories:

1. Interpersonal Role
2. Informational Role
3. Decisional Role
 Information System Classification:
• Operational Management - Includes transaction processing system,
office automation system, and knowledge management system, handles
structured data, and used by workers and employees to streamline daily
operations
• Tactical Management - Used by business unit managers, handles semi-
structured data, and includes management information systems
• Strategic Management - Used by executives, handles unstructured data,
and includes the decision support system and executive support system.
 Specific Use Cases for Information
Systems:
• Enterprise Resource Planning - Provides organization-wide integration of
important business activities, handles the allocation of resources to optimize
efficiency
• Accounting Information System - Manages all of the accounting information
in an organization, including payroll to streamline human resource tasks
• Sales Management System - An information system that manages and
monitors all of the sales and marketing data in an organization to streamline
each step of the sales process
 The Importance of Information Systems
1. Optimize Communication - Information systems can optimize and
improve the efficiency of collecting and dispensing data. This allows both
managers and workers to communicate quickly to complete company tasks.
For example, management can give workers access to documents
stored in the Cloud or another database. Employees can communicate by
inputting new information that the system automatically tracks and updates.
2. Improve Operational Management & Streamline Decision-Making
Because information systems provide the most updated and
accurate data, owners and managers can improve operational decision-making.
Enterprise leaders can use an IS to improve customer service,
streamline internal processes, and offer a competitive edge in the form of a
price advantage.
Sales and marketing data give insight into customer purchasing
patterns and market trends, which provides the information needed to make a
customized marketing campaign or enhance sales strategies.
3. Enhance Record-Keeping
An information system stores all of the required company data to
comply with tax and labor laws, such as financial, sales, and payroll records.
Successful companies exploit their information system's recording
capabilities by properly organizing and presenting historical data so it is
available when needed.
Information systems also generate audit trails, which allow management
to quickly access an old customer transaction or employee input.
 The Benefits of Using Information
Systems
1. Tailored Information
Each business intelligence system delivers the data a specific user
needs to take a particular action. For example, a dashboard tells the sales
manager how each team member is performing while also using the same
data set to tell each team member how many leads he/she needs to contact to
meet a KPI.
2. Customized Formats
Modern information systems customize formats for each user,
making it easier for everyone to access and understand data. For example,
dashboards use a bar chart to display sales data to managers so they can
know each week's productivity.
Based on the same set of data, a sales team member can view a pie
graph to see his individual contribution to the total sales data. Customizing
formats allows everyone to complete their jobs in a timely fashion.
3. Real-Time Data
When a user inputs a new variable, an information system automatically updates and
sends notifications to any authorized individuals. Employees no longer have to send emails to
other departments notifying them of a change, and management doesn't have to worry about
duplicated data or outdated inputs.
As a result of having real-time data available, decision-making across the organization
improves.
4. Flexibility
Information systems are adaptable and can easily be reprogrammed to adjust to new
business requirements.
Because individual portions of the technology system can usually be upgraded if there
is a need, businesses don't have to buy an entirely new system every time there is a new
requirement. As a result, the organization can save money, time, and resources on managing
all of their data.
 The 5 main purposes of an IS include-
1. Input
Input refers to the data that is put in or uploaded into a database. Organizations must
assess their business needs to determine which type of data sources can help to increase
knowledge and meet key objectives before hiring a specialist to begin the input process.
A computer information system specialist captures and collects raw data from sources
inside the organization, such as a customer relationship management system, set of financial
statements, or inventory counts. Data can also be collected externally from sources such as a
purchasing list or social media channels.
During the input process, a specialist must code and specify the type of analysis that will
be performed by the user so the data has meaning to the organization.
2. Storage
A specialist must store data in the most precise and detailed manner to
ensure information security is maintained. IT should perform backups and
summaries of the data regularly to prevent losing valuable information caused
by a user error.
To ensure the data is secure in case of a disruption or natural disaster,
specialists should store the data in a different physical location from the
business itself. Though rare, a flood or fire can cause immense harm to both
data storage and backup data storage.
3. Processing
During the processing stage, a computer information system specialist
takes the raw data and transforms it into meaningful business information. Both
simple and complex processing techniques are utilized, depending on the
circumstances and data sets.
For example, a simple processing tactic is to use the raw data to
calculate the total number of products sold in a certain location or day.
4. Feedback or Control Loop
Once data is processed and generated, it goes through a feedback or
control loop. A computer system will repeatedly perform the same process that
depends on the output of the prior loop.
If there is a poorly processed data set, it can affect the input of the
following data in the next loop. This is why it's so important for an
organization to hire a specialist who understands the complexities of proper
processing techniques.
5. Output
Once data is inputted, stored, processed, and programmed for control loops, it is
referred to as output data. Output data are the insights or results generated through the
entire information system functional process. For example, a dashboard uses data sets to
portray information in the form of charts, graphs, and other visuals.
Other output data may be presented in the form of a charter or a document that
summarizes and describes the data. Numbers are also another form of textual output
that is utilized to convey information. The type of visuals or textual output utilized
should depend on what is being conveyed.
For example, a pie chart helps to show portions while a line graph is better at
displaying a time series trend. Organizations can use output data to develop insights and
perform further analysis that helps decision-makers take the correct actions at the
correct times.