Unit I: Information Systems – An Introduction Contents 1.1 Objectives Block I │Strategic View of...

Unit I: Information Systems – An Introduction

Contents

1.1

Objectives ............................................................................................................................ 4

1.2

Introduction.......................................................................................................................... 4

1.3 An Overview of Information Systems................................................................................. 5

1.4 Types of Information Systems............................................................................................. 7

1.4.1 Operations support systems.............................................................................................. 7

1.4.2 Management Support Systems......................................................................................... 8

1.5 The Changing Business Environment and Information Systems ................................... 10

Block I/ Information Systems – An Introduction

1.6 The Information Technology vs. Information Systems and their Influence................... 11

1.6.1 Information Technology:................................................................................................ 12

1.7 Developing Information System Solutions........................................................................ 13

1.8 Management Information System (MIS)......................................................................... 14

1.9

Summary............................................................................................................................ 15

1.10

Glossary ............................................................................................................................. 15

1.11 Self Evaluating Questions.............................................................................................. 16

1.12

Activities............................................................................................................................ 17

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1.13

References.......................................................................................................................... 17

Block I │Strategic View of MIS

Unit I – Information Systems – An Introduction

1.1 Objectives

After studying this unit you will be able to:

• discuss the concept of Information Systems • explain the goals and characteristics of an information

system • give an account of the changing business environment and the

influence of IT and Information Systems on it

• identify and explain the different types of informationsystems

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1.2 Introduction

Information system, in simple terms is a system that collects andstores data. A better explanation for an information system wouldbe – “a set of interrelated components that collect, manipulate,store and disseminate data and information, and provide afeedback mechanism to meet an objective.”

Top quality, up-to-date and well-maintained information systemsare the backbone of most of the successful companies across theglobe. They are instrumental in providing the right informationto the right people in these organizations, even if the peopleare located around the world. Information systems play a pivotalrole in the success of global organisations by enabling thedecision-makers to view all aspects of the business in real time.

Information systems are used in all businesses – from a smallmusic store to multinational companies. They cannot survivewithout the basic information systems to perform the operationsof accounting and finance. Over the years, the InformationSystems have evolved from the basic Transaction InformationSystem (TIS) that deals with the simple business transactions tothe Management Information System (MIS), which help make managerial

decisions, and Strategic Information Systems to refine the

business strategy of organisations.

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In this unit, we shall look at the concept of information system,

and take a brief look at Management Information System.

1.3 An Overview of Information Systems

Information systems are commonly understood to be associated withthe computer systems. This belief limits the scope of theinformation system from the wider organizational perspective to anarrow technological perspective. Information systems have alwaysbeen an integral part of the human organization, both businessand social.

People and organizations use information on a daily basis and theorganizations use information systems for sales, accounts,finance, planning, manufacturing etc to enhance the efficiency.The components that are used to gather data, process it, andconvert it into a useful piece of information that can assist inthe decision-making process are all part of the InformationSystem. Speed, accuracy and cost reduction are the main advantages ofusing information systems.

The figure below provides a visual presentation of thefunctioning of an information system.

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Input: This is the activity of capturing and collecting the rawdata. For example, in a university grading system, the teachersmust submit the grades of the students for the system to producea summary of the grades for the semester.

Processing: This activity transforms data into useful outputs. Inother words, the raw data is converted to useful information andis very critical in any business setting. This process willinclude calculating, comparing and storing data for futurereferences.

Output: This activity involves the production of the usefulinformation in the form of reports and documents. For instance,outputs may include pay-cheques for employees or reports formanagers etc.

Feedback: Feedback is the useful information from the informationsystem that can be used to bring changes to the input and theprocesses. The feedback is the main corrective measure fororganizations to achieve their goals, cut costs and increaseprofits. • People

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• Data

• Information • Set Procedures • Software Support • Hardware Support • Communications

An Information System is used for:

• Remembering the Past • Handling the Present • Predicting and Preparing for the Future

1.4 Types of Information Systems

The application of information systems that are implemented intoday’s business world can be classified in several differentways.

Conceptually, there are two kinds of support systems – OperationsSupport Systems and Management Support Systems. Most of thesystems can be classified into either of the two support systems.

The figure below illustrates this conceptual classification ofinformation systems applications.

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Let us briefly look at some examples of such Information Systemscategories.

1.4.1 Operations support systems

Operations support systems produce a variety of informationproducts for internal and external use, but they do not emphasizethe specific information products that can best be used bymanagers. Usually, further processing by management informationsystems is usually required to produce information that can bestbe used by managers. Operations Support Systems aim at processingbusiness transactions, control industrial processes, supportenterprise communications, and update corporate databasesefficiently.

Transaction processing systems (TPS) are examples of operations

support systems that record and process the data resulting from

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business transactions. Transactions could be processed either in

batches, or in real-time (online) as per the requirements. For

example, Point-Of-Sale systems at many retail stores use

electronic cash register terminals to capture and transmit sales

data electronically to regional computer centres for immediate

(real-time) or nightly batch processing.

Process control systems monitor and control physical processes.

For example, a petroleum refinery uses electronic sensors linked

to computers to monitor chemical processes continually in an

effort to control the refinery process.

Enterprise collaboration systems enhance team and workgroup

communications and productivity and include applications. For

example, knowledge workers in a project team may use e-mails for

communication, and videoconferencing to hold electronic meetings

and coordinate their activities.

1.4.2 Management Support Systems

Management support systems focus on providing information and

support for effective decision making by managers. Conceptually

speaking, there are several types of information systems that

support a variety of decision-making responsibilities –

Management Information Systems, Decision Support Systems, and

Executive Information Systems.

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Management Information System or MIS serves the functions ofplanning, controlling and decision making by generating routinesummary and exception reports. The reports generated by MIS servethe middle management and includes on-demand “Standard” reports.These systems derive data from the TPS and convert them intovaluable information for monitoring performance of employees inan organization. The transactions recorded by the TPS areanalysed and reported using the MIS. The features and the workingof MIS will be dealt in detail in the succeeding units.

The Executive Information System or EIS provides the decision-makers with the information in a readily accessible andinteractive format. The EIS usually provides a summary of theactivities of the entire organization and also provides thedetailed break-up of each of the activities. This informationsystem is used for generating reports for the top management(strategic management). These reports and documents generated areused to monitor all the levels of the organization. It aids inthe decision making by providing information, models and analysistools and is mainly used for strategic and analysis work.

Decision Support Systems provide interactive support for thedecision-making processes of managers and other businessprofessionals. For example, an advertising manager may use aDecision Support System to determine how to spend the advertisingbudget. A production manager may use a DSS to decide how much

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product to manufacture, base on the expected sales associatedwith a future promotion.

1.4.3 applications.

Knowledge management systems are knowledge-based information

systems that support the creation, organization, and

dissemination of business knowledge to employees and managers

throughout a company. For example, intranet access to best

business practices, sales proposal strategies, and customer

problem resolution systems.

Strategic Information Systems apply information technology to a

firm’s products, services, or business processes to help it gain

a strategic advantage over its competitors. For example, online

stock trading, and e-commerce Web systems.

1.5 The Changing Business Environment and Information Systems

Information systems are evolving as a result of the changes tothe business environment. Adapting to the changing needs isinformation systems’ greatest asset and this led them to becomethe most important part of any growing and establishedbusinesses.

Now, the advantages of information systems are becoming sosignificant that businesses will not be able to survive without

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these systems. Earlier information systems were considered asonly management reporting tools, however, with the emergence ofthe computer technology since the 1980s the roles of thesesystems have increased exponentially.

First, in 1970s, the transaction processing systems were put inplace which enabled the companies to carry out routinetransactions like accounting, payroll and inventory management.In the 1980s, the decision support systems were put into use andit could support unstructured and uncertain decision situations.In the 1990s the business process engineering brought about arevolution in the use of information systems in businesses.

Now, in the 2000s the information systems are reshaping thebasics of business and technology has become an integral part ofthe business as it provides a competitive technological edge overother companies. The level of communication that the buyers andsellers are demanding cannot be met without the aid of theinformation systems.

An example of such extensive use of information systems can be

seen in the Hindustan Lever Limited (HLL). HLL has implemented

information systems across its supply chain networks which have

helped it integrate all its business partners such as suppliers,

vendors and distributors. The objective of this exercise was to

integrate the manufacturing, financial and distribution processes

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to improve working capital management and reduce channel

inventory across its supply chain network.

The implementation of the information systems in businessesimpact suppliers, customers, distributors, employees,shareholders and partners. It supports the operations at alllevels and also aids in decision making.

The figure above provides the purposes, users and functions ofthe information systems across the business environmentAbbreviations: DIS: Decision Information Syste

m MIS: Management Information Syste

m 1.6 Information systems deal with the complete information managementof the organization using various tools and techniques throughdiverse communication channels including human resources andcomponents of the information technology.

IT is the subset of the Information Systems as the information

systems use IT to solve the operational and managerial issues. IT

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is the technology behind the information systems and deals

comprises of the computer hardware, software and the

telecommunications that support the information systems.

The table here shows how the IT supports the Information Systems:

Issue Solution by InformationSystems with thesupport of IT

The Result

Information can beseen only at one placeat a time

Shared Database Informationcan b multiple simultaneously

e seenfrom

locations

Experts required for complex jobs

Expert Systems All

employees complex jobs

can do

Choice betweencentralization and de-centralization

Telecommunication Networks

Centralization centralization simultaneously

and de-possibl

e

Offices for on-field employees

Mobile Computing Virtual field offices

Find Information Enterprise Application System

Information at the finger tips

The figure below shows the role of IT in a business environment.

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The Role of IT in a Business Environment

1.6.1 Information Technology:

IT comprises of hardware, software, databases andtelecommunication and all these are included in a company’stechnology infrastructure. This infrastructure forms thefoundation for the computer-based information systems.

The Hardware consists of the computer equipments that are used toperform the activities of input, processing and outputoperations. The keyboard and the mouse are the input devices, thecomputer chips and the processors are the processing devices andthe printers and computer screens are the output devices.

The Software consists of computer programs and applications thatgovern the functioning of the computer systems. These are theapplications that process the data and provide the feedback forimproving the process.

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1.7 Developing Information System Solutions

One of the major challenges for business managers is to developsuccessful information system solutions to business problems. Amanager is responsible for developing new or improved uses ofinformation techniques for his/her organization. As a businessmanager, one is required to frequently manage the developmentefforts of information systems specialists and other business endusers.

Generally, some form of systematic development process is used in

conceiving, designing, and implementing many of the computer-

based information systems. The diagram below highlights some of

the major activities that are to be achieved and managed in a

complete Information System development cycle. In this process,

the end users and information specialists design information

system applications by analysing the requirements of an

organization. Some of the other activities include investigating the

economic or technicality of the proposed application, learning

how to implement the new system, and maintaining the business value

of a system.

Developing information systems solutions to business problems can be implementedand

managed as a multistep process.

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1.8 Management Information System (MIS)

Management Information Systems are those systems that allowmanagers to take decision for successful running of theirdepartments. MIS is the computer based information system thatprovides the management with the tools to organize the tasks ofthe specific departments, evaluate the performances of theemployees of the department and efficiently run the day-to-dayactivities of the department.

Software is embedded in the MIS which aids in decision making,database creation, people management hardware resources, peoplemanagement and project management. The system also helps inmaintaining the hardware and software resources in theorganization.

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It is a planned system of collecting, processing, storing anddisseminating data in the form of information needed to carry outthe functions of management. It consists of computer resources,people and procedures used in the modern business enterprise.

The goal of the MIS organization is to deliver information

systems to the various levels of corporate managers. MIS

professionals create and support the computer system throughout

the company. Trained and educated to work with corporate computer

systems, these professionals are responsible in some way for

nearly all of the computers, from the largest mainframe to the

desktop and portable PCs.

1.9 Summary

Data, Information and Knowledge are three of the most importantaspects for the development of a company and the informationsystems handle and control these elements. The term data refersto the raw inputs, and the processed data is termed asinformation; and the understanding and implementation of thisinformation is termed as knowledge.

An Information System deals with people, data, information,

procedure, software, hardware and communications within a

company. An information system is used for handling all these

aspects of the company and also for remembering the past

activities, handling the present tasks and forecasting and

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preparing for the future. IT is the technology behind the

information systems and deals comprises of the computer hardware,

software and the telecommunications that support the information

systems.

Management Information System or MIS is a computerised businessprocessing system generating information for the people in theorganisation to meet the information needs for decision-making toachieve the corporate objectives of the organisation.

1.10 Glossary

• MIS: Management Information Systems • IS: Information Systems • Data: Data constitutes the raw facts that are the input for

the Information Systems. • Information: Information is the transformed data. It can

also be termed as a collection of facts organized in such a

way that they have additional value beyond the value of the

facts themselves.

• Input: This is the activity of capturing and collecting theraw data.

• Processing: This activity transforms data into useful

outputs. In other words, the raw data is converted to useful

information and is very critical in any business setting.

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This process will include calculating, comparing and storing

data for future references.

• Output: This activity involves the production of the useful

information in the form of reports and documents.

• Feedback: Feedback is the useful information from the

information system that can be used to bring changes to the

input and the processes.

• Point-Of-Sales (POS): it is the location where a salestransaction occurs.

1.11 Self Evaluating Questions

Two Marks Questions

1.

2.

3. What is data?

4.

Five Marks Questions

1. Explain the role of IT in the effective

functioning of an IS Ten Marks Questions

1. Explain the impact of IS on today’s business.

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2. Explain the features of:

• Transaction Information System • Management Information System • Executive / Decision Information System • Knowledge Information Systems • Strategic Information Systems

1.12 Activities

• The Indian Railways recently introduced the Web-based Passenger

Reservation System (PRS) and introduced online paymentthrough credit and debit cards. Explain how this informationsystem helped Indian Railways in becoming more efficient notjust from the customer’s point-of-view but also from theRailways management’s perspective.

1.13 References

• Mahadeo Jaiswal, Monika Mital. Management Information Systems.Oxford University Press, 2007

• W S Jawadekar. Management Information System. Second Edition,

Tata McGraw Hill Publications

• Ramesh Behl. Information Technology for Management. The McGrawHill Companies,

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2009

•

• James A O’Brien, George M Marakas, Ramesh Behl. ManagementInformation Systems. Tata McGraw Hill Education Private Limited. 2010

• Waman. S. Jawadekar. Management Information Systems. Text and Cases –

A Digitalfirm perspective. Tata McGraw Hill Education Private

Limited. 2011

• S. Sadagopan. Management Information Systems. PHI Learning PvtLtd.

• Leffy Oz. Management Information Systems. Cengage Learning Inc.2009

• Raymond Mcleod, Junior George P. Schell. Management

Information Systems. Pearson Education Inc. 2007

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