Lecture Notes on Information Systems Theory

Lecture 1: Introduction to Systems:

Definition of Systems
It is informative to find out exactly what is meant by a system.

A system can be defined as an inter-related set of components that work together within an
identifiable boundary to achieve some overall goals.

However, it is important to note that the term ‘system’ does not solely apply to computer systems. It
can apply to things as diverse as the legal system, the transport system, the social services system, the
solar system and even the digestive system! Any phenomenon which exhibits a relationship among
interrelated components can be termed a system.

Elements of a System
All systems consist of three (3) key elements:

• Input: Capturing and assembling elements that enter the system to be processed e.g. raw
materials, people, skills, money.
• Processing: The transformation processes which convert input into output, e.g. a production
process, a mathematical calculation, a meeting of people.
• Output: Transferring elements that have been produced by a transformation process to their
ultimate destination in a form which will be meaningful to its recipient, e.g. a product, a piece
of information. In the case of information, output is in the form of a report, a telephone call
etc.

Structure of a System
The structure of a system is described within the context of its internal and external factors:

• Environment: All those external elements, whose changes in behavior, attitude etc., affect the
working of the system and all those external elements, which are affected by the system’s
environment.
• Boundaries: The separation of a system from its environment i.e. the features or constraints
which depict the scope of activities for a system and delineate areas of responsibility. The
system is inside the boundary, whereas the environment lies outside. Boundaries can be
imposed by the nature of the system itself or can be decided upon by management. They may
be flexible, changing over time or as the wider organization changes.
• Interfaces: It is the area of contact between one system boundary and another. Several
systems may share the same environment and may be connected to one another by means of
a shared boundary or interface.
• Sub-system: A system representing a component of a larger system. Systems often consist
of numerous subsystems. Each subsystem has elements, interactions with other subsystems,
and objectives. Subsystems perform specialized task for the overall system. In business,
functions such as marketing, finance, and manufacturing are subsystems.

Classification of a System
• Open versus Closed Systems
o Closed Systems: A system that is cut off from its environment and does not interact
with it. These systems have no exchange with the environment, i.e. all interaction
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goes on within the system’s own boundaries. This term normally applies to machinery
where, if inputs are known, then outputs can be accurately predicted. Systems within
organisations cannot be described in this way - interaction with other systems is an
inherent characteristic of organisational systems. A closed community would be an
example of a (social) closed system.
o Open Systems: A system that interacts freely with its environment. It receives inputs
from its environment, processes or transforms these inputs and passes outputs of
various types back into its environment. In this type of system, only some of the
relevant inputs can be identified, others may occur unexpectedly, for example, a
company’s competitor may unexpectedly lower prices etc.

• Adaptive Systems
A system that has the ability to change itself or its environment in order to survive.

• Deterministic versus Probabilistic Systems

o Deterministic/Mechanistic Systems: These are predictable systems where, if the
inputs are known, as well as the present state of the system, then the system’s
outputs can be accurately forecast. Machines and computer programs are examples.
o Probabilistic/Stochastic Systems: The output of these systems can only be predicted
as a probability rather than a certainty. This is true of almost all social or
organizational systems as it is always impossible to account for all inputs.

• Shared and Overlapping Sub-Systems

Systems consist of sub-systems, or in commercial terms, organizations are composed of
departments and sections and these sections interact and are therefore inter-dependent. One
sub-system can belong to one or more systems; therefore, it can be inferred that a change to
one sub-system may affect more than one system. The use of overlapping systems is often a
sound economical arrangement, for example, a centralized computer facility can be used by
a number of departments in an organization to reduce overall costs. Shared systems do,
however, cause some problems. There is a need for a high level of co-ordination and in the
event of change, approval will need to be sought from a number of sources, making shared
systems less flexible where rapid change is needed.

System Performance:
Two measures of system performance are:

• Effectiveness: The degree to which set goals are achieved. It is therefore concerned with the
results or the outputs of a system.
• Efficiency: A measure of the use of inputs (or resources) to achieve results. How much money
is used to generate a certain level of sales.

Measure of Performance:
The efficiency and effectiveness of a system can be measured by having the following two elements
built into the system:

• Feedback: a flow of information from the output component to the decision-maker

concerning the system’s output or performance. Indicates if the system performance is
meeting standards. Based on this, the decision- maker, who acts as a control, may decide to
modify the inputs or the processes or both.
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• Control: A major system function which monitors and evaluates system feedback, to establish
to what degree system goals are being achieved

Success Factor of a System

A key element in the success of a system is its ready adaptation to changes in its environment. This
again emphasizes the need for monitoring and control of systems based on relevant, timely feedback.
Thus, a system is composed of subsystems or components that are inter- related, has boundaries,
exists within an environment, has interfaces between subsystems and with the environment, faces
constraints (limitations) and receives inputs from and delivers outputs to its environment in order to
fulfill its purpose (goal oriented).

The Systems Approach (or Systems Theory)

The Systems Approach or Systems Theory has a set of ideas with which we can view systems. This set
of ideas can be summarized as follows:

• All systems are composed of inter-related parts or sub-systems and the system itself can only
be fully explained and understood when viewed as a whole. This is known as holism or synergy.
The systems approach takes the view that the whole is greater than the sum of the parts and
that by looking at separate parts of a system in isolation, vital inter-relationships will be
ignored or misunderstood.
• Systems are hierarchical in structure, i.e. a system is made up of sub- systems and each
subsystem is made up of further sub-systems. For example, your course is a sub-system of the
degree courses offered by the school, which is a subset of the College, subset of the University.
It is important to decide where to impose a boundary when attempting to analyse a system,
so that, only those sub-systems which relate to your area of interest are considered.
• The components of a system form an indissoluble whole so that when one part is changed,
this change will affect other parts of the overall system. When change is effected, it is
important to realise what systems it does affect and what needs to be done to ensure that
the changes are properly implemented.
• Sub-systems need to work towards the goals of the system to which they belong and not
pursue their own goals independently. Where this latter situation does occur, a condition of
sub-optimization occurs. This is to be avoided, if possible, but it must be recognized that in
most organizations, conflicting objectives across departments is inevitable. In these cases,
some form of compromise needs to be reached.
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Lecture 2: Information Systems in Organizations

Definitions of Information Systems

Information systems are generally used in organizations to help provide for the information needs of
the organization. An information system can be defined as: a set of interrelated components that
collects, stores, and processes data from various sources to provide information necessary to support
and improve the day-to-day operations in a business.

Let’s take a look at some of the more popular definitions, first from Wikipedia and then from a couple
of textbooks:

• “Information systems (IS) is the study of complementary networks of hardware and software
that people and organizations use to collect, filter, process, create, and distribute data.”
• “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.”
• “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.”

As you can see, these definitions focus on two different ways of describing information systems: the
components that make up an information system and the role that those components play in an
organization.

Information System (IS) versus Information Technology (IT)

• Information System (IS): The flow of information in an organization and between
organizations encompassing the information the business creates, uses, and stores. It
concerns the efficient use of resources for providing the required level of information support
for the management of business operations. It represents the application’s perspective.

• Information Technology (IT): The enabling mechanism, which facilitates the processing and
flow of this information, as well as the technologies used in the physical processing to produce
a product or provide a service. Includes telecommunications, computers and automation
technologies, represents the technical perspective. Information technology has significantly
expanded the power and potential of most information systems. Information technology
is a contemporary term that describes the combination of computer technology (hardware
and software) with telecommunications technology (data, image, and voice networks).
Technology has created a data and information explosion in virtually all businesses. The ability
of businesses to harness and manage this data and information has become a critical success
factor in most businesses.

Components of Information Systems

Information System is made up of five components: hardware, software, data, people, and process.
The first three, fits well under the technology category, and are generally what most students think of
when asked to define information systems. But the last two, people and process, are really what
separate the idea of information systems from more technical fields, such as computer science. In
order to fully understand information systems, students must understand how all of these
components work together to bring value to an organization.
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• Hardware: Information systems hardware is the part of an information system you can
touch – the physical components of the technology. Computers, keyboards, disk drives, iPads,
and flash drives are all examples of information systems hardware.
• Software: a set of instructions that tells the hardware what to do. Software is not
tangible – it cannot be touched. When programmers create software programs, what they are
really doing is simply typing out lists of instructions that tell the hardware what to do. There
are several categories of software, with the two main categories being operating-system
software, which makes the hardware usable, and application software, which does something
useful. Examples of operating systems include Microsoft Windows on a personal computer
and Google’s Android on a mobile phone. Examples of application software are Microsoft
Excel and Word
• Data: You can think of data as a collection of facts. For example, your street address, the
city you live in, and your phone number are pieces of data. Like software, data is also
intangible. By themselves, pieces of data are not really very useful. But aggregated, indexed,
and organized together into a database, data can become a powerful tool for businesses.
• People: When thinking about information systems, it is easy to get focused on the technology
components and forget that we must look beyond these tools to fully understand how they
integrate into an organization. A focus on the people involved in information systems is the
next step. From the front-line help-desk workers to systems analysts, to programmers, all the
way up to the chief information officer (CIO), the people involved with information systems
are an essential element that must not be overlooked.
• Process: A series of steps undertaken to achieve a desired outcome or goal.
Information systems are becoming more and more integrated with organizational processes,
bringing more productivity and better control to those processes. But simply automating
activities using technology is not enough – businesses looking to effectively utilize information
systems do more. Using technology to manage and improve processes, both within a company
and externally with suppliers and customers, is the ultimate goal. Technology buzzwords such
as “business process reengineering,” “business process management,” and “enterprise
resource planning” all have to do with the continued improvement of these business
procedures and the integration of technology with them. Businesses hoping to gain an
advantage over their competitors are highly focused on this component of information
systems.

Objective of Information System in an Organisation

Information systems in an organization are dedicated to improving the performance of knowledge
workers in organizations through the application of information technology.

• Improving performance is the ultimate objective of information systems - not the storage of
data, production of reports, or even getting the right information to the right person at the
right time.
• Knowledge workers (managers, professionals, staff analysts and clerical workers) are the
clientele.
• Organizations are the context. The focus is on information handling in goal seeking
organizations.
• The application of information technology is the challenge and opportunity facing the IS
professional.
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Benefits of Information Systems

A good information system ensures that:

• the right information is provided.

• to the right degree of accuracy
• when it is required
• in the right format/layout
• to the right people
• in the most efficient way possible.

Types of Information Systems

• Transaction Processing System (TPS): A system that processes data resulting from
business transactions, updates operational databases, and produces business documents.
• Management Information System (MIS): A system or group of systems which collects and
presents management information relating to a business in order to facilitate its control.
Management Information Systems are those that support all management levels in the
conduct of their functions, such as operations, administration, or planning and programming.
• Office Automation System (OAS): A system that automates office procedures and enhances
office communications and productivity.
• Decision Support Systems (DSS): A system that provides interactive ad-hoc support for the
decision making process of managers.
• Expert System (ES): A knowledge-based system that provides expert advice and acts as expert
consultants to users.
• Executive Information Systems (EIS): A system that provides critical information tailored to
the information needs of top management.