ms621-mis-u1-l01-concepts-full 2011

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Unit 1 : Lesson - 1

Information Systems in BusinessUnit 1: INFORMATION SYSTEMS IN BUSINESS

Information system Systems concepts - Classification and Types of Information Systems Information Systems components:Hardware, Software, Network, Database, People and Procedure Translating business objectives into Information SystemArchitecture .

MS613MS613MANAGEMENT INFORMATIONMANAGEMENT INFORMATION

SYSTEMSSYSTEMS

T. Subramanaian M.A., M.B.A., M.C.A., PMP., (PhD)Associate Professor,Crescent Business School

T SUBRAMANIAN MA., MBA., MCA., PMP., (PhD) E-mail [email protected]

A triple Post graduate in Business Administration, Computer Applications andEconomics; and certified Project Management Professional (PMP) of ProjectManagement Institute, U.S.A; having 8 years of experience in teaching, 20 yearsindustrial experience in managing the IT infrastructure and softwaredevelopment;

Overseas teaching experience at Malaysia (Multimedia University) as full-timefaculty and at Iran (Kish University), Dubai and Singapore (S P Jain Center of Management) as visiting faculty.

Joined B.S Abdur Rahman University , Chennai in 2008 positioned as AssociateProfessor in Crescent Business School .

Worked with Multimedia University , Malaysia from 2003 till 2008 in Faculty of Management, positioned as Head of IT-Management Unit.

Worked with a textile marketing organization in India from 1986 to 2003, joined asProgrammer-Analyst and raised up to the level of General Manager (Systems);Heading the unit from its inception till Nov 2003;

Started the career in 1982 as Software Developer with Madura Coats, Bangalore(subsidiary of Coats Viyella plc, UK) until 1986;


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Principles and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples and Learning ObjectivesPrinciples Learning Objectives

The value of information is directly linked tohow it helps decision makers achieve theorganizations goals.

Distinguish data from information anddescribe the characteristics used toevaluate the quality of data.

Models, computers, and information systems areconstantly making it possible fororganizations to improve the way theyconduct business.

Name the components of an informationsystem and describe several systemcharacteristics.

Identify four basic types of models andexplain how they are used.

Knowing the potential impact of informationsystems and having the ability to put thisknowledge to work can result in asuccessful personal career, organizationsthat reach their goals, and a society with ahigher quality of life.

Identify the basic types of businessinformation systems and discuss who usesthem, how they are used, and what kind of benefits they deliver.

System users, business managers, andinformation systems professionals mustwork together to build a successfulinformation system.

Identify the major steps of the systemsdevelopment process and state the goal of each.

Discuss why it is important to study andunderstand information systems.

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Information ConceptsInformation ConceptsInformation ConceptsInformation ConceptsInformation ConceptsInformation ConceptsInformation ConceptsInformation Concepts


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Information systems and their role in aInformation systems and their role in abusiness enterprisebusiness enterprise

The objective of any management is to achieve theorganizational goal, in the process we will beutilizing the scarce resources viz. men, material,machines, money; effectively and efficiently.

This is possible through proper planning andefficient Decision Making. Management Informationis another resource which is provided byInformation Technology to the modern manager inaiding decision making process.

Latest tools provided by the informationtechnology, not only aid the manager in theprocess of decision making, but also suggestalternative solutions and guide him in takingdecisions.

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Information SystemInformation SystemAn Information System is a collection of components that work together to provideinformation to help in the operations andmanagement of an organization.Information Technology is the integration of computers, communications equipment, andother technology used in informationsystems.


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Characteristics of Valuable InformationAccurate, timely, relevant information is the keyfor good decision making

The Value of InformationGood decision making is the key toorganizational survival.

Information: Important ResourceInformation: Important Resource

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The Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableInformationInformationInformationInformationInformationInformationInformationInformation


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The Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableThe Characteristics of ValuableInformationInformationInformationInformationInformationInformationInformationInformation

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Distinguish data from information anddescribe the characteristics used to evaluatethe quality of data.

Models, computers, and information systemsare constantly making it possible fororganizations to improve the way theyconduct business.









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System and ModelingSystem and ModelingSystem and ModelingSystem and ModelingSystem and ModelingSystem and ModelingSystem and ModelingSystem and ModelingConceptsConceptsConceptsConceptsConceptsConceptsConceptsConcepts

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SystemSystemSystemSystemSystemSystemSystemSystemA set of elements or components thatinteract to accomplish goals

InputProcessing mechanismFeedback OutputSystem boundary


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Components of a SystemComponents of a SystemComponents of a SystemComponents of a SystemComponents of a SystemComponents of a SystemComponents of a SystemComponents of a System

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System ConceptsSystem Concepts

A system is a set of related elements thatcollectively work together to achieve somecommon purpose or goal.

A system is an interrelated set of business procedures usedwithin one business unit, working together for some purposefor example - Inventory systems keeps track of purchases andsupplies. The systems takes input from outside, process it andsends the resulting output back to its environment.

System has certain key features, such asenvironment, boundaries, Input, Output,transformation process, interrelatedcomponents, interfaces and purpose


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Components Interrelation Boundary Purpose Environment Interfaces Constraints Input Output

key features of Systemkey features of System

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System and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling ConceptsSystem and Modeling Concepts


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Systems ClassificationSystems ClassificationSystems ClassificationSystems ClassificationSystems ClassificationSystems ClassificationSystems ClassificationSystems Classification

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Systems thinkingSystems thinkingViewing organization in terms of suborganizations or subsystems

A framework for problem solving anddecision making

Managers focus on overall goals andoperations of business

Understand data and information flowwithin an organization


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Notes :Notes : SystemsSystemsA typical system is arranged or configured within a system boundarythus distinguishing it from its environment. It is normally classifiedalong numerous dimensions and among these are:

Simple or ComplexOpen or ClosedStable or DynamicAdaptive or NonadaptivePermanent or Temporary

System performance can be measured in terms of effectiveness, ameasure of the extent to which a system meets its goals, andefficiency, a measure of what is produced divided by what isconsumed. Its evaluation also requires the use of performancestandards, which are stated objectives used in determining systemperformance levels. Once standards are established, systemperformance is measured and compared. Variances are then used asdeterminants of system performance.

A system variable is a quantity or item that can be controlled by thedecision maker. The price a company charges for its product is asystem variable because it can be controlled. A system parameter is avalue or quantity that cannot be controlled, such as the cost of a rawmaterial.

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What Is An InformationWhat Is An InformationWhat Is An InformationWhat Is An InformationWhat Is An InformationWhat Is An InformationWhat Is An InformationWhat Is An InformationSystem?System?System?System?System?System?System?System?


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What is an Information System?What is an Information System?

An Information System is a collection of components that work together toprovide information to help in theoperations and management of anorganization.

Thus it is a set of interrelated componentsthat collect (input), manipulate (process)and disseminate data and information(output) and provide feedback mechanismto meet an objective.

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Information Systems FunctionsInformation Systems Functions


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Notes : Information SystemNotes : Information SystemAn information system is a set of interrelated elements or components thatcollect (input), manipulate (process), and disseminate (output) data andinformation, and provide a feedback mechanism to meet an objective.

Input refers to the act of gathering and capturing raw data. It can be amanual or automated process but regardless of the method used, theaccuracy of the input is critical in order to achieve the desired output.

Processing involves the conversion or transformation of data into usefuloutputs

while the term output refers to the production of useful information,usually in the form of documents and reports. In information systems, theterm feedback is used to describe the output used to make changes to

input or processing activities .

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ComputerComputer- -Based Information SystemBased Information SystemA Computer-Based Information System isa set of hardware, software, database,telecommunication, people andprocedures that are configured to collect,manipulate, store and process data intoinformation.For example, a companys payrollsystem, order entry system andinventory control system are examples of CBISs.


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The Benefits of HumanThe Benefits of Human--Computer SynergyComputer Synergy

Synergy: combinedresources produceoutput exceeding thesum of the outputs of the same resourcesemployed separatelyTranslates humanthought into efficientprocessing of largeamounts of data

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Components of an Information SystemComponents of an Information SystemComponents

Hardware - Equipment such as computersSoftware - Instructions for the equipmentStored Data - Facts stored in the systemPersonnel - People who operate the systemProcedures for the people to follow


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Components of an Information SystemComponents of an Information System

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What could happen if personnel andWhat could happen if personnel and

procedures are ignored when a new IS isprocedures are ignored when a new IS isdeveloped for a businessdeveloped for a business


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Notes : Computer based InformationNotes : Computer based InformationSystemSystem

The term hardware is used to describe the physical computerequipment used in a CBIS while software is defined as the setof programs that govern the operation of the computer.A database is an organized collection of facts and information,and most managers and executives believe that it is one of themost valuable and important parts of a CBIS.Telecommunications is the electronic transmission of signalsfor communications and enables organizations to carry outtheir processes and tasks through effective computernetworks.People are called the most important element in a CBISbecause they manage, run, program, and maintain the system.Finally, the term procedures refer to the strategies, policies,methods, and rules for using the CBIS.

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Knowing the potential impact of informationsystems and having the ability to put thisknowledge to work can result in asuccessful personal career, organizationsthat reach their goals, and a society witha higher quality of life.

Identify the basic types of businessinformation systems and discuss who usesthem, how they are used, and what kindof benefits they deliver.





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Business Information SystemsBusiness Information SystemsBusiness Information SystemsBusiness Information SystemsBusiness Information SystemsBusiness Information SystemsBusiness Information SystemsBusiness Information Systems

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Types of ISs:Types of ISs:Types of ISs are distinguished from each otheron the basis of what the system does or by thetechnology used to construct the systems. Youwill work with at least four classes of informationsystems.

Transaction processing systems (TPS) Management Information systems (MIS). Decision Support systems (DSS). Expert systems (ES).


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Transaction Processing Systems (TPS)Automates the handling of data about businessactivities or transactions. For example, a banks TPSwould capture information about withdrawals fromand deposits to customer accounts.

Management Information Systems (MIS)Converts raw data from transaction processingsystem into meaningful form.

Where as TPS keeps track of sales, a MIS canpinpoint which items are selling slowly and which areselling quickly. The MIS can therefore direct themanufacturing department on what to produce andwhen.

Types of ISsTypes of ISs


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Types of ISsTypes of ISsDecision Support Systems (DSS)

is designed to help decision makers with decisions.Operations that often answer what if? questions.Whereas an MIS produce a report, a DSS provides aninteractive environment in which decision makers canquickly manipulate data and models of business

Expert Systems (ES)If-then-else rules or other knowledge representationforms describe the way an expert would approachsituations in a specific domain of problems. The ES asks

questions (which an expert would ask) and the endusers supplies the answers. The answers are then usedto determine which rules apply and the ES provides arecommendation based on the rules.

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Few other of ISsFew other of ISs

Group Decision Support Systems(GDSS)

Generate ideas, establish priorities, andreach decisions in group environment

Geographic Information Systems (GIS)

Represents local conditions or featuresAllows planning, decision-making, andmonitoring of local conditions or activities


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The geographical locations,population density,culture of people,areas served,competitor existence,distance from warehouse,location of production centers and warehouse,

shortest routes to move products from one center to another etc are allgoing to be seen in Maps rather than tables to visualize the situation better .

This will definitely aid better decisions in sales promotion.

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Transaction Processing SystemsTransaction Processing SystemsTransaction Processing SystemsTransaction Processing SystemsTransaction Processing SystemsTransaction Processing SystemsTransaction Processing SystemsTransaction Processing Systems

A transaction processing system (TPS) is anorganized collection of people, procedures,software, databases, and devices used to recordcompleted business transactions.

Process business exchangesMaintain records about the exchanges

Handle routine, yet critical, tasksPerform simple calculations


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Payroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingPayroll Transaction ProcessingSystemSystemSystemSystemSystemSystemSystemSystem

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Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)

Routine information for routine decisionsOperational efficiencyUse transaction data as main inputDatabases integrate MIS in differentfunctional areas


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Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)Management Information Systems (MIS)

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MIS OutputsMIS OutputsMIS OutputsMIS OutputsMIS OutputsMIS OutputsMIS OutputsMIS Outputs

Scheduled reportsDemand reportsException reports


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Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)Decision Support Systems (DSS)

DSS- A decision support system is an organizedcollection of people, procedures, software,databases, and devices used to supportproblem-specific decision making.

Interactive support for non-routine decisions orproblemsEnd-users are more involved in creating a DSS thanan MIS

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Essential DSS ElementsEssential DSS ElementsEssential DSS ElementsEssential DSS ElementsEssential DSS ElementsEssential DSS ElementsEssential DSS ElementsEssential DSS Elements


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SpecialSpecialSpecialSpecialSpecialSpecialSpecialSpecial- -------Purpose Business InformationPurpose Business InformationPurpose Business InformationPurpose Business InformationPurpose Business InformationPurpose Business InformationPurpose Business InformationPurpose Business InformationSystemsSystemsSystemsSystemsSystemsSystemsSystemsSystems

Artificial Intelligence (AI) SystemsVirtual Reality SystemsExpert SystemsOther Special-Purpose Business InformationSystems

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The Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialThe Major Elements of ArtificialIntelligenceIntelligenceIntelligenceIntelligenceIntelligenceIntelligenceIntelligenceIntelligence


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Virtual RealityVirtual RealityVirtual RealityVirtual RealityVirtual RealityVirtual RealityVirtual RealityVirtual Reality

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Data GloveData GloveData GloveData GloveData GloveData GloveData GloveData Glove


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Notes : Business Information SystemsNotes : Business Information SystemsNotes : Business Information SystemsNotes : Business Information SystemsBusinesses utilize information systems to improve their operations at all levels. Nearly all

workers, from top management to production line employees, come in contact withcomputerized systems on a daily basis. This results in a variety of systems functioning indifferent areas.First one of business information systems is the transaction processing system (TPS).This is used to manage and facilitate common business transactions such as sales tocustomers, and payments to employees and suppliers. Related to the TPS are workflowsystems, which are rule-based, management software used to direct, coordinate, andmonitor the execution of an interrelated set of tasks arranged to form a businessprocess. Also related to TPSs are enterprise resource planning (ERP) systems. Theseare a set of integrated programs that are capable of managing a companys vitalbusiness operations for an entire multisite, global organization. Although the scope of anERP system may vary from company to company, most provide integrated software tosupport the manufacturing and finance business functions of an organization.The information collected using a TPS can be transformed into routine information formanagers and decision-makers through the use of a management information system(MIS). These systems are designed to provide a variety of reports including scheduledand demand reports. Decision support systems (DSS) use the data collected by a TPS tosupport problem-specific decision-making. A DSS operates from a managerial

perspective and is often designed to take managerial decision-making styles intoconsideration. Whereas an MIS helps an organization "do things right," a DSS helps amanager "do the right thing."Newer technologies and specialized systems are also used by businesses. Among theseare artificial intelligence (AI) systems, which attempt to take on the characteristics of human intelligence.

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Systems DevelopmentSystems DevelopmentSystems DevelopmentSystems Development

Systems development is the act of creating ormodifying existing business systems.Developing information systems to meetbusiness needs is highly complex, so much sothat it is common for information systemsprojects to overrun budgets and exceedscheduled completion dates. Systemdevelopment can be viewed as a series of steps as described in the next slide.

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Systems DevelopmentSystems DevelopmentSystems DevelopmentSystems DevelopmentSystems DevelopmentSystems DevelopmentSystems DevelopmentSystems Development


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Information Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalInformation Systems in FunctionalAreas of BusinessAreas of BusinessAreas of BusinessAreas of BusinessAreas of BusinessAreas of BusinessAreas of BusinessAreas of Business

AccountingFinanceMarketingProductionHuman Resource ManagementOther functions

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Benefits of InformationBenefits of InformationSystemsSystems


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Benefits of Information SystemsBenefits of Information SystemsBetter information

information system process data and they produce information,which is the basis for good decision making.

Improved servicecomputer information system operates at any time of the day ornight and process data faster than humans

Your Holiday is our working day (MAS)

Increased productivityWith computer information system people can do more in aperiod of time than they would be able to do if they did not havesuch systems.

Reduced cycle time (video)

Source of Substainable Competitive Advantage"customer integration" (Dell)

help the business to reduce the cost of production

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Reduced cycle time


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Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?Notes : Why Learn About Information Systems?

Studies have shown that the involvement of managers and decision makers in all aspects of

information systems is a major factor for organizational success, including higher profits andlower costs. A knowledge of information systems will help you make a significant contribution onthe job and will also help you advance in your chosen career or field.You must acquire both computer literacy and information systems literacy in order to be able touse information systems to meet personal and organizational goals. Computer literacy refers toknowledge of computer systems and equipment and the ways they function. It stressesequipment and devices (hardware), programs and instructions (software), databases, andtelecommunications.Information systems are used in all functional areas and operating divisions of business. Infinance and accounting, information systems are used to forecast revenues and business activity,determine the best sources and uses of funds, manage cash and other financial resources,analyze investments, and perform audits to make sure the organization is financially sound andthat all financial reports and documents are accurate. In sales and marketing, it is used todevelop new goods and services (product analysis), determine the best location for productionand distribution facilities (place or site analysis), determine the best advertising and salesapproaches (promotion analysis), and set product prices to get the highest total revenues (priceanalysis)Information systems are used in almost every industry or field. The airline industry employsInternet auction sites to offer discount fares and increase revenue. Investment firms useinformation systems to analyze stocks, bonds, options, the futures market, and other financialinstruments, as well as to provide improved services to their customers. Banks use informationsystems to help make sound loans and good investments. The transportation industry usesinformation systems to schedule trucks and trains to deliver goods and services at the least cost.

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SummarySummarySummarySummarySummarySummarySummarySummary

Data - raw factsInformation - data transformed into ameaningful formSystem - set of elements that interact toaccomplish a goal

Systems development - creating ormodifying existing business systems


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Annexure

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Transaction Processing System (TPS)Transaction Processing System (TPS)

TPS automates routine and repetitive tasks that arecritical to the operation of the organization, such aspreparing a payroll, billing customers, Point-of-Sale andWarehouse operations.Data collected from this operation supports the MIS andDSS systems employed by Middle ManagementComputerizes the primary and most of the secondaryactivities on the Value Chain.Primary purpose to perform transactions and collectdata.


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Management Information Systems (MIS)Management Information Systems (MIS)

These systems access, organize, summarize, anddisplayed information for supporting routine decision making in the functional areas. Gearedtoward middle managers, MIS are characterizedmainly by their ability to produce periodic reportssuch as a daily list of employees and the hours theywork, or a monthly report of expenses as comparedto a budgetTypical uses would be in Replenishment, PricingAnalysis (Markdowns) and Sales ManagementDecisions supported are more structured.Primary purpose to process data into information

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Decision Support Systems (DSS)Decision Support Systems (DSS)These systems support complex non-routinedecisions.Primary purpose to process data into informationDSS systems are typically employed by tacticallevel management whose decisions and what-if analysis are less structured.This information system not only presents theresults but also expands the information withalternatives.Some DSS methodologies

Mathematical ModelingSimulationQueriesWhat-If (OLAP-Cubes)Data mining


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Intelligent Support Systems (ISS)Intelligent Support Systems (ISS)

Essentially, artificial intelligence (AI) these systemsperform intelligent problem solving.One application of AI is expert systems. Expert systems (ESs) provide the stored knowledge of experts tononexperts, so the latter can solve difficult or time-consuming problems. These advisory systems differ fromTPS, which centered on data, and from MIS and DSS,which concentrated on processing information. With DSS,users make their decisions according to the informationgenerated from the systems. With ES, the system makesrecommended decisions for the users based on the built-in expertise and knowledge.

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Executive Support Systems (ESS)Executive Support Systems (ESS)

ESS systems or Enterprise Information Systems (EIS) originallywere implemented to support Senior management. Thesesystems have been expanded to support other managers withinthe enterprise.At the senior management level they support Strategic activities which deal with situations that significantly may change themanner in which business is done.


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Office Automation Systems (OAS)Office Automation Systems (OAS)

Electronic communication is only one aspect of whatis now known as an office automation system (OAS).Other aspects include word processing systems ,document management systems and desktop publishing systems .OAS systems are predominantly used by clerical workers who support managers at all levels. Amongclerical workers, those who use, manipulate, ordisseminate information are referred to as dataworkers .

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Knowledge Management Systems (KMS)Knowledge Management Systems (KMS)

An additional level of staff support now exists betweentop and middle management. These are professionalpeople, such as financial and marketing analysts that actas advisors and assistants to both top and middlemanagement. They are responsible for finding ordeveloping new knowledge (External Content) for theorganization and integrating it with existing knowledge(Internal Content).

KMS that support these knowledge workers rangefrom Internet search engines and expert systems, toWeb-based computer-aided design and sophisticateddata management systems


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What characteristics of an Information System make itWhat characteristics of an Information System make itManagement Information SystemsManagement Information Systems

oror

Define MISDefine MIS

These systems access, organize, summarize, anddisplayed information for supporting routine decision making in the functional areas.Geared toward middle managers, MIS arecharacterized mainly by their ability to produceperiodic reports such as a daily list of employeesand the hours they work, or a monthly report of expenses as compared to a budget.Typical uses would be in Replenishment, PricingAnalysis (Markdowns) and Sales ManagementDecisions supported are more structured.Primary purpose to process data into information

ms621-mis-u1-l01-concepts-full 2011

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