itm module1

7/27/2019 ITM Module1

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Foundation of information

System in businessModule -01

Ptd By Mr.Lokesh K N


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What is Information System

Information System plays a crucial role in themanagement of enterprise

In this fast changing world quality, timeliness,

innovation, customer orientation is moreimportant to translate demand into realizablegoals.

Thus large portion of world has its stake

information system.

Information system is a centre stage of modernmanagement.


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What is Information System

Management emphasize the effective use of

information system for managerial decision

making rather than merely stressing on

technology

Information highlight on processed data

rather than raw data

Systems emphasizing a fair degree of

integration & a holistic view


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Information System Defined

As an integrated system of man & machine

for providing the information to support the

operation, the management & decision

making function in the organization


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Definition emphasizes

Organization wide information

Decision support

Managerial emphasis

Computer based systems.

So basic knowledge of information system is

almost becoming a generic skill needed by

every professional.


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Uses of IS

Gaining competitive advantage

Balancing market strength

Increasing market shares Acquire more attractive finance

Introducing new products & services

Loyal customers


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Data vs. Information

Data

Raw facts

Distinct pieces of information, usually formatted in a

special way

Information

A collection of facts organized in such a way that they

have additional value beyond the value of the facts

themselves


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Examples

Data thermometer readings of temperature

taken every hour:

16.0, 17.0, 16.0, 18.5, 17.0,15.5.

Informationtodays high: 18.5todays low: 15.5

Transformation


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Types of Data

Data Represented by

Alphanumeric data Numbers, letters, and other characters

Image data Graphic images or pictures

Audio data Sound, noise, tones

Video data Moving images or pictures


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Data Information

Data InformationTransformation


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Characteristics of Information Timeliness: Information must reach the user ina timely manner, just when it is needed; not too

early, not too late Appropriateness: Information must be relevant

to the person who is using it.

Accuracy: Accuracy costs. We don't always need100% accurate information so long as we knowthe degree of accuracy it represents (eg: + or -5%). (Remember the value of information).

Conciseness: Information should always containthe minimum amount of detail that isappropriate for the user. Too much detail causesinformation overload.


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Frequency: Frequency is related to timeliness.How often the information required. Itsfrequency should be synchronized with the

timing of the decision making of the user. Understandability: The format and presentation

of information are very important.

Complete: All the relevant parts are included.E.g. marketing data about household incomesmay lead to bad decisions, if not accompanied byconsumption habits of the target population.

Current: Decisions are often based on thelatest information available.

Economical: The costs of gathering informationshould be justified by the overall benefits


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Nature of Modern Business

Large size

Oligopolistic character

Diversified Global reach

Technology oriented

Change Govt control


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System

A set of interconnected elements toachieve a common objective

Elements are interrelated andinterdependent

Composed of sub-systems, which in turnmay be made up of other subsystems

The set of elements may be: Input(s),

Process(es), or output(s)


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A system cannot exist in vacuum

It exists and functions in an environment,

separated by its boundary Open system: interacts with its environment,

exchanges inputs and outputs

Closed systems: do not interact, or exchange anyinputs or outputs with its environment

Info system converts data into information


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Information Systems

An information system(IS) is typically considered to bea set of interrelated elements or components that

collect(input), manipulate(processes), and disseminate

(output) data and information and provide a feedback

mechanism to meet an objective.


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Ir. Muhril Ardiansyah, M.Sc., Ph.D. 18

What Is A System?

Systems have three basic functions:

1. Input:

Involves capturing and assembling elementsthat enter the system to be processed.

Example: - raw materials,

- energy,- data.


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Ir. Muhril Ardiansyah, M.Sc., Ph.D. 19

What Is A System? (continued)

Systems have three basic functions (continued):

2. Processing:

involves transformation processes that convert input

into output.

Example: - manufacturing process,

3. Output:

involves transferring elements that have been

produced by a transformation process to their

ultimate destination.

Example: - finished products,

- human services


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Chapter 1 Foundations of

Information Systems in

Business

20

A Business as a System


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Organization Structure

Development of good information system call fordeep understanding of the structure & dynamicsof the organization.

Organization is an arrangement of people in aninstitution based on concept of division of labour,authority, responsibility & decision making withthe objective of attaining corporate goals.

Mr. Anthony, a mgmt theorist classified

organization management into 3 levels Strategic

Tactical

operational


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Operational level

Making routine day to day decisions

Address well structured problem

Information internal to the organization

Processing of large data

Primary attribute is efficiency

Tactical level

Decision taken by middle mgmt staff & have medium &long term impact

E.g. performance analysis, budget analysis, vendor rating.

Summarized organization wide information required ( bothinternal & external)

Need is quality of information

Less structured, flexible & critical data

Mix of effectiveness & efficiency


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Strategic level

Long term implication

E.g. diversification, new plant location, techacquisition, strategic alliance.

Strategic decision enable organization to reach

zenith of success or destruction Calls for unstructured, uncertain external

information

Information should be extremely adaptive,

flexible & insightful.


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What Is An Information System?

An Information System can be

any organized combination Of:

- people,

- hardware,- software,

- communications networks,

- policies.

This system

Stores, retrieves,

transforms, and

disseminates information

in an organization


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Figure 1.6 Components of an information system


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Fundamental Roles of IS in Business

There are three fundamental role:

Support of its business

processes and operations.

Support of decision

making by its employees

and managers. Support of its strategies

for competitive advantage.


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Trends in Information Systems


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Trends In Information Systems:

1. Data processing: 1950s 1960s

- electronic data processing systems

-- transaction processing, record keeping,

and traditional accounting applications.

2. Management reporting: 1960s 1970s

- management information systems-- management reports of pre specified

information to support decision making.


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Trends In Information Systems (continued):

3. Decision support: 1970s 1980s

- decision support systems

4. Strategic and User Support: 1980s 1990s

- end user computing systems

- executive information systems

- expert systems

- strategic information systems


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Trends In Information Systems (continued):

4. Electronic Business and Commerce: 1990s

2000s

- internet based e business and e

commerce systems


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The IS (Information System) Functions:

A major functional area of business equally as

important to business success, as the function

of:

- accounting,

- finance,

- operations management,

- marketing,

- human resource management.


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Business

33

The IS Function

The IS function is A major functional area of business

An important contributor to operational efficiency,

employee productivity, morale, customer service and

satisfaction A major source of information and support for decision

making

A vital ingredient in developing competitive products

and services in the global marketplace A key component of todays networked business


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Business

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Purposes of Information Systems

l f f


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Classification of IS

Information Systems

Operations Support

System

Management Support

System

Transactionprocessing

systems

Officeautomation

systems

Management

information

systems

Decisionsupport

systems

Executiveinformation

systems

Expert

System


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1) Transaction processing systems

1) Process business exchanges

2) Maintain records about the exchange

3) Handle routine, yet critical, tasks

4) Perform simple calculations

2) Office automation systems automate officeprocedures and enhance office communicationsand productivity.


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Management information systems

Routine information for routine decisions

Operational efficiency Use transaction data as main input

Databases integrate MIS in different functionalareas

Decision Support System

Interactive support for non-routine decisions orproblems

End-users are more involved in creating a DSSthan an MIS


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Executive information systems

provide critical information tailored to the

information needs of executives

Expert Systems

are knowledge-based systems that providesexpert advice and act as expert consultants to theusers


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MIS Characteristics:

System approach Takes Comprehensive view in the light of its

objective

Management oriented Top down approach followed

Derived from the overall business objectives

Need based Caters to info needs at different levels

Exception based

Exception based reporting principle


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Futuristic

On the basis of projections

Integrated Blends info from several operational areas

Common data flows

Should avoid data duplication and redundancy Long term basis

Strive to be futuristic

Divide and conquer

Use partitioning into subsystems

Central database

Let subsystems access the master data


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MIS Functions:

Data capturing

Processing of data

Storage

Retrieval

Dissemination of MI finished product of

MIS

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