Information System Concepts

Learning Objectives
What is a system? Open vs. Closed system Information System concepts

Photo-Voltaic Cell System

What is a System?
System:
System is an interrelated set of components, with identifiable boundary, working together for some purpose

System Characteristics
Components----------------------Subsystems Interrelated components A boundary A purpose An environment Interfaces Input Output Constraints

Interface

Environment
Components Input

Output Boundary Interrelationship

Systems and Subsystems

A fast food restaurant as a system: Example

Environments: customers, food distribution, banks, etc.

Storage Office Inputs: Food, labor, cash, etc.

Kitchens

Outputs: Prepared food Dining Room Trash Etc.

Counter

Boundary

interrelationship

Benefiting from systems thinking: seeing the forest and the trees
Seeing interrelationships among systems rather than linear cause-and-effect chains whenever events occur. Seeing processes of change among systems rather than discrete "snapshots" of change, whenever changes occur. A problem or opportunity could be viewed as a system of input, processing, output, feedback, and control components.

Assignment
Describe your university or college as a system.
What is the input? What is output? What is the boundary? What are the components and their relationship? The constraints The environment

Draw a diagram of this system

Exercise:
Anil Mehta is the Regional Sales Manager for a pharmaceutical company. He has been constantly facing decline in the sales for the last 3 quarters. Apply systems thinking so as to formulate a system identifying the sub-components, input, output and processes for the given sales problem.

Information System
Computer-based ISs that take data as raw material, process it, and produce information as output.

Information Systems
Refers to the interaction between people, processes, data and technology. The term is used to refer not only to the information and communication technology (ICT) an organization uses, but also to the way in which people interact with this technology in support of business processes.

IS Components

To summarise:
Can you differentiate among IT, IS and IM

The Major roles of IS

Support Competitive Advantage Support Business Decision Making

Support of Business Processes and Operations

The expanding roles of IS in Business and Management

Strategic and End-user Support: 1980s 1990s End-user computing systems Executive Information Systems Expert Systems Strategic Information Systems

Decision Support : 1970s 1980s Decision Support Systems Management Reporting: 1960s 1970s Management Information Systems Data Processing: 1950s 1960s Electronic Data Processing systems

The expanding roles of IS in Business and Management

Electronic Business and Commerce:1990s 2000s Internet based e-business and e-commerce

KINDS OF INFORMATION SYSTEMS

Decisions

KIND OF SYSTEM
STRATEGIC LEVEL

GROUPS SERVED
SENIOR MANAGERS

Unstructured

MANAGEMENT LEVEL

MIDDLE MANAGERS

OPERATIONAL LEVEL

OPERATIONAL MANAGERS

Structured

SALES & MARKETING

MANUFACTURING FINANCE & ENGINEERING

ACCOUNTING HUMAN RESOURCES

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Three General Kinds of IS

Operational-level systems
support operational managers by monitoring the day-to-days elementary activities and transactions of the organization. e.g. TPS, OAS

Management-level systems
support the monitoring, controlling, decision-making, and administrative activities of middle managers. e.g. MIS, DSS

Strategic-level systems
support long-range planning activities of senior management. e.g. ESS
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A Framework for IS (with respect to support provided)

Executive Support Systems (ESS) Management Information Systems (MIS) Decision Support Systems (DSS) Office Automation Systems (OAS) Transaction Processing Systems (TPS)

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Transaction Processing Systems (TPS)

Computerized system that performs and records the daily routine transactions necessary to conduct the business; business; these systems serve the operational level of the organization
TYPE: Operational-level Operational INPUTS: transactions, events PROCESSING: updating OUTPUTS: detailed reports USERS: operations personnel, supervisors DECISION-MAKING: highly structured DECISION-

EXAMPLE: payroll, accounts payable

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Office Automation Systems (OAS)

Computer system, such as word processing, electronic mail system, and scheduling system, that is designed to increase the productivity of data workers in the office.
TYPE: Operational Level INPUTS: documents, schedules PROCESSING: document management, scheduling, communication OUTPUTS: documents; schedules USERS: clerical workers

EXAMPLE: document imaging system

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Decision Support Systems (DSS)

Information system at the management level of an organization that combines data and sophisticated analytical models or data analysis tools to support semistructured and unstructured decision making. TYPE: Management-level Management INPUTS: low volume data PROCESSING: simulations, analysis OUTPUTS: decision analysis USERS: professionals, staff managers DECISION-MAKING: semi-structured DECISIONsemiEXAMPLE: sales region analysis
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Characteristics of Decision-Support Systems

1. DSS offer users flexibility, adaptability, and a quick response. 2. DSS operate with little or no assistance from professional programmers. 3. DSS provide support for decisions and problems whose solutions cannot be specified in advance. 4. DSS use sophisticated data analysis and modelling tools.
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Management Information Systems (MIS)

Information system at the management level of an organization that serves the functions of planning, controlling, and decision making by providing routine summary and exception reports.
TYPE: Management-level TYPE: Management INPUTS: high volume data INPUTS: PROCESSING: simple models PROCESSING: OUTPUTS: summary reports OUTPUTS: USERS: middle managers USERS: DECISION-MAKING: structured to semi-structured DECISION-MAKING: semi-

EXAMPLE: EXAMPLE: annual budgeting

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Characteristics of MIS
1. MIS support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff. 2. MIS are generally reporting and control oriented. They are designed to report on existing operations and therefore to help provide day-today control of operations. 3. MIS rely on existing corporate data-and data flows. 4. MIS have little analytical capability. 5. MIS generally aid in decision making using past and present data. 6. MIS are relatively inflexible. 7. MIS have an internal rather than an external orientation.
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Executive Support Systems (ESS)

Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications.
TYPE: TYPE: Strategic level INPUTS: aggregate data; internal and external INPUTS: data; PROCESSING: interactive PROCESSING: OUTPUTS: projections OUTPUTS: USERS: senior managers USERS: DECISION-MAKING: highly unstructured DECISION-MAKING: EXAMPLE: EXAMPLE: 5 year operating plan
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Model of a Typical Executive Support System

ESS workstation
Menus Graphics Communications Local processing

ESS workstation

Internal Data TPS/MIS Data Financial Data Office Systems Modeling/ analysis

External Data Dow Jones Gallup Poll Standard & Poor's

ESS workstation

Menus Graphics Communications Local processing

Menus Graphics Communications Local processing

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Classification of IS by Functional Area

The accounting information system The finance information system The manufacturing (operations, production) information system The marketing information system The human resources information system

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Sales & Marketing Systems

Systems that help the firm identify customers for the firms products or services, develop products and services to meet customers needs, promote products and services, sell the products and services, and provide ongoing customer support.
EXAMPLES System Order processing Market analysis Description Enter, process, and track orders Identify customers and markets using data on demographics, markets, consumer behavior, and trends Determine prices for products and services 35 Organizational Level Operational Management

Pricing analysis

Management

Manufacturing and Production Systems

Systems that deal with the planning, development, and production of products and services and with controlling the flow of production.
Examples System Machine control Description Control the actions of machines and equipment Organizational Level Operational

Production planning

Decide when and how many Management products should be produced Decide where to locate new production facilities Strategic
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Facilities location

Finance and Accounting Systems

Systems that keep track of the firms financial assets and fund flows.

Examples System Accounts receivable Budgeting Profit planning Description Track money owed by the firm Prepare short-term budgets Plan long-term profits Organizational Level Operational Management Strategic

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Human Resources Systems

Systems that maintain employee records; Track employee skills, job performance, and training; And support planning for employee compensation and career development.
Examples System Training and development Compensation analysis Human resources planning Description Track employee training, skills, and performance appraisals Monitor the range and distribution of employee wages, salaries, and benefits Plan the long-term labor force needs of the organization 38 Strategic Management Organizational Level Operational

Other Classifications
Expert systems expert advice Knowledge management systems support the creation, organization, & dissemination of business knowledge

Information systems can be mismanaged and misapplied so that they create both technological and business failure.

Top Five Reasons for Success User involvement Executive management support Clear statement of requirements Proper planning Realistic expectations

Top Five Reasons for Failure Lack of user input

Incomplete requirements and specifications Changing requirements and specifications

Lack of executive support Technological incompetence

In Summary, the IS Function

Is a major functional area of business. Is an important contributor to operational efficiency, employee productivity and morale, and customer service & satisfaction. Is a major source of information and support for decision making. Provides a strategic advantage in developing competitive products & services.