Module 1

Information Systems
By
Anilkumar R

Objectives
 System
 Data vs. Information
 Strategic role of information in management
 Organization as an information system
 TPS
 MIS
 DSS
 ESS
 OAS
 Networking concepts
 Telecommunications networks

System
What Is a System?

 System: A set of components that work together to achieve a
common goal

 Subsystem: One part of a system where the products of more
than one system are combined to reach an ultimate goal

 Closed system: Stand-alone system that has no contact with
other systems

 Open system: System that interfaces with other systems

Information
Processed date is called information

Information System
 An information system (IS)- is any combination
of information technology and people's activities that support
operations, management and decision making.
 In a very broad sense, the term information system is
frequently used to refer to the interaction between people,
processes, data and technology. In this sense, the term is
used to refer not only to the information and communication
technology (ICT) that an organization uses, but also to the
way in which people interact with this technology in support
of business processes.

Components of Information System:

Example – Health Care Information System:

Information
Why Do People Need Information?

Individuals - Entertainment and enlightenment

Businesses - Decision making, problem solving
and control

Data vs. Information
Data Information
 raw facts  data with context
 no context  processed data
 just numbers and text  value-added to data
 summarized
 organized
 analyzed

 Data: 51007
 Information:
 5/10/07 The date of your final exam.
 $51,007 The average starting salary of an accounting major.
 51007 Zip code of Bronson Iowa.

Data Manipulation
 Example: customer survey
 Reading through data collected from a customer survey
with questions in various categories would be time-
consuming and not very helpful.
 When manipulated, the surveys may provide useful
information.

Data Information
 6.34 SIRIUS SATELLITE RADIO INC.
 6.45
 6.39 $7.20
 6.62 $7.00
 6.57 $6.80
 6.64 Stock Price
$6.60
 6.71
$6.40
 6.82
$6.20
 7.12
 7.06 $6.00

$5.80
1 2 3 4 5 6 7 8 9 10
Last 10 Days

Data  Information  Knowledge
Data

Summarizing the data
Averaging the data
Selecting part of the data
Graphing the data
Adding context
Adding value

Information

Data  Information  Knowledge
Information

How is the info tied to outcomes?
Are there any patterns in the info?
What info is relevant to the problem?
How does this info effect the system?
What is the best way to use the info?
How can we add more value to the info?

Knowledge

Information Systems
Generic Goal:
 Transform Data into Information

 At the Core of an Information System is a Database (raw data).

Information Systems (TSP and PCS)

 Data doesn’t just appear,
Capturing Data is really the first step

 These systems help capture data but they also have
other purposes (goals):
1. Transaction Processing Systems
(TPS)
2. Process Control Systems (PCS)

Capturing Data
 What are some examples of real TPS’s?

 What kind of data is being capture?

 How is this data transformed into Information?

Data Processing
 Recall that a basic system is composed of 5 components
 Input, Output, Processing, Feedback, Control
 Typically processing helps transform data into information.

Input Output
Processing
Raw Data Information

Processing
 Summarizing
 Computing Averages
 Graphing
 Creating Charts
 Visualizing Data

Processing: Great Example
 Navigation System
 Specialized Geographic Information System
 Input: Maps, Addresses, Points of Interest,
“Yellow Pages”
 Processing:
 Computing Shortest Paths;
 Finding the Nearest Chinese Restaurant
 Output:
 Directions (each turn + a map with arrows)
 List of nearby Chinese Restaurants (sorted by dist.)

Analysis – Navigation System

 Recall that Information Systems have five more specific
components:
 People, Data, Communication Network, Hardware, Software.
 In a Navigation System…
 what is the Communication Network?
 what is the Hardware?
 who are the People?

Data, Information,
and Systems

Figure 1.3 Several subsystems make up this corporate accounting
system.

Executives
24

ESS
Senior
DSS Managers

MIS

KWS

Transaction Processing System Workers

Fig 2.1: Types of Information Systems

Transaction Processing
System
 A TPS support the monitoring, collection, storage, processing and
dissemination of the organization’s basic business transitions.

 It also provides the input data for many applications involving
support systems such as DSS.

 Some times several TPSs exit in one company

 The TPS are considered critical to the success of any organization
since they support core operations such as purchasing of materials,
billing customers, preparing a payroll and shipping goods to
customers

Routine Business
Transactions in a
Manufacturing Company
Payroll Sales
Employee time cards Sales records
Employee pay and deductions Invoices and billings
Payroll checks Accounts receivable
Sales returns
Shipping

Purchasing Production
Purchase orders Production reports Quality-
Deliveries control reports
Payments (accounts payable)

Finance and accounting Inventory management
Financial statements Material usage
Tax records Inventory levels
Expense accounts

Management Information
System
It is also popularly known as the Information system, the Information and Decision
system, the computer based Information system

Definitions of MIS:

The MIS is defined as a system which provides information support for decision-
making in the organization
The MIS is defined as an integrated system of man and machine for providing
the information to support the operations, the management and the decision-
making function in the organization.
The MIS is defined as Computer based Information system

MIS
 MIS is an information system, which processes data and
converts it into information. A management information
system uses TPS for its data inputs. The information
generated by the information system may be used for control
of operations, strategic and long-range planning. Short-range
planning, management control, and other managerial
problem solving. It encompasses processing in support of a
wide range of organizational functions & management
processes. MIS is capable of providing analysis, planning &
decision making support. The functional areas of a business
may be marketing, production, human resource, finance and
accounting.

Characteristics of MIS
 They are flexible, allowing for many different ways of
analyzing data and evaluating information;
 They are capable of supporting a range of skills and
knowledge;
 They help managers get things done through interpersonal
communication with other members of the organization;
 Because managers are busy people who switch rapidly
between different tasks, they should not
 require extensive periods of concentration;
 They should make it easy to interrupt the work and return to
it at a later time;
 They should protect a manager, as far as possible, from
information overload.

Case study:
Case study: Buying a new car

If you want to purchase a new car from a Ford dealer, chances are that the make and model you
want, in the right colour with the right accessories, is not in stock. It’s just too expensive to have
cars with every possible combination of options sitting in the parking lot waiting for a customer. In
the past, it’s been almost impossible for dealers to track down exactly the model that a customer
wants.

With the new information system, the dealer can type the details of the required car into a terminal
connected to the main Ford plant at Dagenham. The information will then come back to tell the
dealer whether there are any cars available of that specification, and exactly where they are. They
may be on the Ford parking lot, or there may be only two available, one at a dealer's in Perth and
the other in Bournemouth. There may be none available – in which case Ford will make one for
you, though this may take some time.

Plant production managers are also connected to the system, and so they know exactly what cars
have
been ordered and can adjust production to reflect demand every day.
 Discussion: This is an example of a management information system. How does it help
– the dealer?
– the customer?
– the manufacturer?

Discussion:
Discussion: A car company gathers information about its
customer base through many sources, including market
research surveys. One company has discovered that it has
relatively fewcustomers in the 18-30 age range. How can this
information be used by the company to improve
its sales?

Decision Support System
 Gorry and Scott-Morton coined the phrase ‘DSS’
 in 1971: “A DSS is an interactive computer based system
that helps decision makers utilize data and models to solve
unstructured problems.”

 A decision support system (DSS) is a computer-based
information system that supports business or organizational
decision-makingactivities. DSSs serve the management,
operations, and planning levels of an organization and help
to make decisions, which may be rapidly changing and not
easily specified in advance. Decision support systems can
be either fully computerized, human or a combination of both.

 A decision support system may present information
graphically and may include an expert system or artificial
intelligence (AI). It may be aimed at business executives or
some other group of knowledge workers.

Typical information gathered by
DSS are:
 Comparative sales figures between one week and the next
 Projected revenue figures based on new product sales
assumptions
 The consequences of different decision alternatives, given
past experience in a context that is described

Benefits of DSS
 Improves personal efficiency
 Speed up the process of decision making
 Increases organizational control
 Encourages exploration and discovery on the part of the
decision maker
 Speeds up problem solving in an organization
 Facilitates interpersonal communication
 Promotes learning or training
 Generates new evidence in support of a decision
 Creates a competitive advantage over competition
 Reveals new approaches to thinking about the problem
space
 Helps automate managerial processes
 Create Innovative ideas to speed up the performance

 In 1987, Texas Instruments completed development of the
Gate Assignment Display System (GADS) for United Airlines.
This decision support system is credited with significantly
reducing travel delays by aiding the management of ground
operations at various airports, beginning with O'Hare
International Airport in Chicago and Stapleton Airport
in Denver Colorado

DSS EXAMPLES:
 MSN Autos - http://autos.msn.com/Default.aspx
 Big Charts -- http://bigcharts.marketwatch.com/
 Databeacon Demos -- http://www.storydata.com
 Documentum eRoom - http://www.documentum.com
 elaws Family and Medical Leave Act Advisor -
http://www.dol.gov/elaws/fmla.htm
 Fidelity Calculators -
http://www.401k.com/401k/tools/tools.htm
 Inspire - http://interneg.carleton.ca/inspire/
 Pinnacor - http://finance.pinnacor.com/
 Principal Financial -
http://www.principal.com/calculators/index.htm
 WATERSHEDSS - http://www.water.ncsu.edu/watershedss/
 Categorization and Evaluation Exercise

Group Decision Support
Systems
A GDSS is an interactive computer based system that
facilitates the solution of semi structured and unstructured
problems when made by a group of decision makers. The
objective of a GDSS is to support the process of arriving at a
decision.

Case study: See Page 555 [Virtual meeting at the world
Economic Forum] by Wiley Edition authored by Turban,
Mclean and Wetherbe

GDSS Example:
EX 1:
Internal Revenue Service, which used a one-room GDSS to
implement its quality-improvement programs based on the
participation of a number of its quality teams.
The GDSS was helpful in identifying problems, generating and
evaluating ideas and developing and implementing solutions.

EX 2:
European automobile industry which used a one-room GDSS
to examine the competitive automotive business environment
and make ten-year forecasts, needed for strategic planning.

Executive Information System / Executive
Support System
EIS
An executive information system (EIS) is a type
of management information system that facilitates and
supports senior executive information and decision-making
needs. It provides easy access to internal and external
information relevant to organizational goals. It is commonly
considered a specialized form of decision support system
(DSS)
ESS
An ESS is a comprehensive support system that goes beyond
EIS to include analysis support, communications, office
automation and intelligence support.

Executives’ information needs

 Prompt, easy-to-use information (quick response time,
simple user interface)
 Presentation should fit his style
 High degree of summarisation
 Details on demand
 Critical success factors
 Exceptions
 External and internal sources

Features of an EIS

 Access to internal and external data
 What-if analysis
 Ad hoc queries
 Drill down
 Project tracking
 Colour business graphics
 Network connections, e-mail access
 High security

Advantages of EIS
 Easy for upper-level executives to use, extensive computer
experience is not required in operations
 Provides timely delivery of company summary information
 Information that is provided is better understood
 EIS provides timely delivery of information. Management can
make
 decisions made promptly.
 Improves tracking information
 Offers efficiency to decision makers

Disadvantages of EIS
 System dependent
 Limited functionality, by design
 Information overload for some managers
 Benefits hard to quantify
 High implementation costs
 System may become slow, large, and hard to manage
 Need good internal processes for data management
 May lead to less reliable and less secure data

Types of EIS software
 Prewritten EIS, e.g.
 Command Center – Pilot Software, Inc.
 Commander - Comshare
 Executive Edge – Execucom
 Custom EIS, e.g.
 MIDS at Lockheed-Georgia

TO SUPPORT EVERYDAY
BUSINESS OPERATIONS:

 TPS - TRANSACTION PROCESSING SYSTEM
 OAS - OFFICE AUTOMATION SYSTEM

TO SUPPORT MANAGERIAL
DECISION MAKING
 MIS - (FUNCTIONAL) MANAGEMENT INFORMATION SYSTEM
 DSS - DECISION SUPPORT SYSTEM
 GDSS - GROUP DECISION SUPPORT SYSTEM
 EIS - EXECUTIVE INFORMATION SYSTEM
 ESS - EXECUTIVE SUPPORT SYSTEM
 ES - EXPERT SYSTEM

47

Fig 2-2: The six major types of information systems.

INTEGRATED BUSINESS
SOFTWARE

Integrates all business functions and processes:
Accounting and Controlling
Finance and Investment
Inventory Control
Materiel Management
Human Resource Management
Production
Sales and Distribution
Project Management
Plant Maintenance
etc.

Major integrated enterprise
solution providers world
wide:

 SAP (R/3 system)
 PeopleSoft
 Oracle
 JDEdwards (OneWorld)
 BAAN
 etc.
 Megatrend (Infosys) Hungarian company

EXPERT SYSTEMS

AI – Artificial Intelligence
Use of computers to perform tasks that normally
require high-level human intelligence
- Humans acquire & input data to their brains through
their five senses (vision, hearing, smell, taste & touch)
- Computers must have a way of mimicking one or
more of these sensing capabilities (computer vision or
“hearing”)

AI areas

 Robotics (primary areas of research & applications);
 Computer vision (image processing – recognize & interpret
high level patterns & make them meaningful – e.g. defective
product, smart weapons);
 Speech recognition (recognizing spoken words – e.g.
dictation);
 Natural language processing (derive the meaning of a
sentence);
 Neural networks (like brains – learning);
 Expert systems (attempt to reach the same conclusions
about a problem as the best human expert would)
 wide variety of potential applications in business.

Expert System (ES)

 Other examples of Experts Systems
 Diagnosis of bacteriological diseases in patients
 Diagnosis of malfunctions in diesel electronic
locomotives
 Configuration of a computer system based on a
customer’s anticipated application workload
 Quality control of products

Advantages of ES
 Can replace expensive or non-available experts;
 Can merge knowledge of many experts
 (preserving, replicating & distributing expert
knowledge);
 Decision making is consistent;
 Decision making is faster;
 ES can work under difficult or dangerous situation (wars)
 Reasoning is explained and documented
 (insight into the decision making process – explain the
rationale by which they reached the decision);
 ES can be integrated to other type of information
systems like DSS or EIS.

Disadvantages of ES

 Narrow focus (very narrow domains of applications)
 Expensive to develop and maintain
 Difficult to test (impossible to present all the possible cases)
 Expert’s knowledge is difficult to obtain and put to the
computer’s knowledge base
 Communication capabilities are poorer (no vague questions!!!)

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Editor's Notes