What is an Information System?

An information system is the set of interrelated components that collect, process, store and distribute information used by/support one or more business process.

Input: The collection of raw data. Processing: The manipulation of data into

information. Output: Distributing valuable information.

Also Includes both technology and people

Information System Is A System

Functions of Information Systems

P r o c e s s i n gC l as s i fyA r r an g e

C al c u l a t e

I N P U T O U TP U T

F e e d b ac k

In fo r m at i o n S ys t e m

O r g an i za t i o n

E n v i r o n m e n t

Brief History of IS

1950's : Electronic Data Processing/ Automatic Data Processing

1960's : Management Information Systems (i.e. Report generating systems)

1970's : Decision Support Systems (DSS), Office Automation Systems

1980's : Information as strategic tool, End-User Computing, Managerial control

1990's : Integration: Core activities + Information as a product

Basic Components of Information Systems

Hardware is a device such as a processor, monitor, keyboard or printer

Software is a program or collection of programs that enable hardware to process data.

Database is a collection of related files or tables containing data.

Basic Components of Information Systems (Continued)

Network is a connecting system (wire line or wireless) that permits different computers to share resources.

Procedures are the set of instructions about how to combine the above components in order to process information and generate the desired output.

People are those individuals who use the hardware and software, interface with it, or uses its output.

Information System – Primary Purpose

Data Elementary description of things, events, activities, and

transactions that are recorded, classified, and stored, but not organized to convey any specific meeting

Information Data that has been organized so that they have

meaning and value to the recipient

Knowledge Information that has been organized and processed to

convey understanding, experience and expertise as they apply to a current problem or activity

Collects data, processes it into information then converts information into knowledge for a specific purpose.

Roles of IS

Support daily tasks of line workers within a business function across business functions knowledge work and production work support effectiveness and efficiency

Support decision making across management levels and functions individual and group strategic, control (e.g., scheduling, resource

allocations)

Roles of IS (continued)

Provide feedback Effectiveness (e.g., conformance), Efficiency

(e.g., cost, cycle time), Adaptability (e.g., response time)

Between levels, between functions Facilitate communication

Policy and Goals Coordination and direction

Interact with environment (e.g., Customers, Suppliers).

KINDS OF INFORMATION SYSTEMS

SALES & MANUFACTURING FINANCE ACCOUNTING HUMAN

KIND OF SYSTEM GROUPS SERVED

STRATEGIC LEVEL SENIOR MANAGERS

MANAGEMENT LEVEL MIDDLE MANAGERS

OPERATIONAL OPERATIONALLEVEL MANAGERS

KNOWLEDGE LEVEL KNOWLEDGE &DATA WORKERS

RESOURCESMARKETING & ENGINEERING

Information System - Classification By Support Function

Operational Managers

Data Workers

Middle Managers

Senior Mgr

Executive Support SystemExecutive Support System

Management Information SystemManagement Information System

Decision Support SystemDecision Support System

Intelligent Support SystemsIntelligent Support Systems

Knowledge Management SystemKnowledge Management System

Office Automation SystemOffice Automation System

Transaction Processing SystemTransaction Processing System

•5-year sales trend•Profit Planning•5-year budget forecasting•Product development

•Sales Management•Inventory Control•Annual budget•Production Scheduling•Cost Analysis•Pricing Analysis

•Simulation•Pgm coding•System support•Word Processing•Desktop Publishing

•Order Processing•Fulfillment•Material Movement•A/R, A/P, GL•Payroll•POS

Four General Kinds of IS Operational-level systems

support operational managers by monitoring the day-to-day’s elementary activities and transactions of the organization. e.g. TPS.

Knowledge-level systems support knowledge and data workers in

designing products, distributing information, and coping with paperwork in an organization. e.g. KWS, 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

A Framework for IS (with respect to support provided)

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

People in organizations

Transaction Processing Systems (TPS)Transaction Processing Systems (TPS)

Computerized system that performs and records Computerized system that performs and records the daily routine transactions necessary to the daily routine transactions necessary to conduct the business; conduct the business;

These systems serve the operational level of the These systems serve the operational level of the organizationorganization

• TYPE: Operational-levelTYPE: Operational-level• INPUTS: transactions, eventsINPUTS: transactions, events• PROCESSING: updatingPROCESSING: updating• OUTPUTS: detailed reportsOUTPUTS: detailed reports• USERS: operations personnel, supervisorsUSERS: operations personnel, supervisors• DECISION-MAKING: highly structuredDECISION-MAKING: highly structured

EXAMPLE:EXAMPLE: payroll, accounts payable payroll, accounts payable

A Symbolic Representation for a payroll TPS

P ayr o l l S ys t e mM a n a g e m e n t

R e po rt s

O n - lin equ e rie s

P ayr o l lm as t e r

fi l e

Em plo y e e da ta (v a rio u s de pa rtm e n ts ) To g e n e ra l le dg e r: wa g e s a n d s a la rie s

G o v e rn m e n t do cu m e n ts

Em plo y e e ch e ck s

Office Automation Systems (OAS)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: Knowledge-levelTYPE: Knowledge-level• INPUTS: documents, schedulesINPUTS: documents, schedules• PROCESSING: document management, PROCESSING: document management, scheduling, communicationscheduling, communication• OUTPUTS: documents; schedulesOUTPUTS: documents; schedules• USERS: clerical workersUSERS: clerical workers

EXAMPLE:EXAMPLE: document imaging system document imaging system

Knowledge Work Systems (KWS)Knowledge Work Systems (KWS)

Information system that aids knowledge workers in the creation and integration of new knowledge in the organization.

•TYPE: Knowledge-levelTYPE: Knowledge-level• INPUTS: design specifications INPUTS: design specifications • PROCESSING: modellingPROCESSING: modelling• OUTPUTS: designs, graphicsOUTPUTS: designs, graphics• USERS: technical staff; professionalsUSERS: technical staff; professionals

EXAMPLE:EXAMPLE: Engineering workstations Engineering workstations

Decision Support Systems (DSS)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 semi-structured and unstructured decision making.

•TYPE: Management-levelTYPE: Management-level• INPUTS: low volume dataINPUTS: low volume data• PROCESSING: simulations, analysis PROCESSING: simulations, analysis • OUTPUTS: decision analysisOUTPUTS: decision analysis• USERS: professionals, staff managersUSERS: professionals, staff managers• DECISION-MAKING: semi-structuredDECISION-MAKING: semi-structured

EXAMPLE:EXAMPLE: sales region analysis sales region analysis

Types of Decisions

• Unstructured Decisions• Novel, non-routine decisions requiring judgment and

insights

• Examples: Approve capital budget; decide corporate objectives

• Structured Decisions• Routine decisions with definite procedures

• Examples: Restock inventory; determine special offers to customers

Types of Decisions (continued)

• Semi structured Decisions• Only part of decision has clear-cut answers

provided by accepted procedures• Examples: Allocate resources to managers;

develop a marketing plan

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.

Management Information SystemsManagement Information Systems(MIS)(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-levelTYPE: Management-level• INPUTS: high volume dataINPUTS: high volume data• PROCESSING: simple models PROCESSING: simple models • OUTPUTS: summary reportsOUTPUTS: summary reports• USERS: middle managersUSERS: middle managers• DECISION-MAKING: structured to semi-structuredDECISION-MAKING: structured to semi-structured

EXAMPLEEXAMPLE: annual budgeting: annual budgeting

Characteristics of Management Information Systems

1. Support structured decisions at the operational and management control levels. However, they are also useful for planning purposes of senior management staff.

2. Its reporting and control oriented and help provide day-to-day control of operations.

3. It rely an existing corporate data-and data flows.4. It have little analytical capability.5. It generally aid in decision making using past and

present data.6. It are relatively inflexible.7. It have an internal rather than an external

orientation.

Executive Support Systems (ESSExecutive Support Systems (ESS))

Information system at the strategic level of an organization that address unstructured decision making through advanced graphics and communications.

TYPE: Strategic levelTYPE: Strategic level

• INPUTS: aggregate data; internal and externalINPUTS: aggregate data; internal and external• PROCESSING: interactivePROCESSING: interactive• OUTPUTS: projectionsOUTPUTS: projections• USERS: senior managersUSERS: senior managers• DECISION-MAKING: highly unstructured DECISION-MAKING: highly unstructured

EXAMPLEEXAMPLE: 5 year operating plan: 5 year operating plan

Major Types of Information Systems

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P ro fitp la n n in g

M a n p o w e rp la n n in g

M a n a g e m e n t -L e v e l S y s te m sS a le sm a n a g e m e n t

S a le s re g io na n a ly s is

I n v e n to ryC o n tro l

P ro d u c t io nS c h e d u lin g

A n n u a lb u d g e t in g

C o s ta n a ly s is

C a p ita lI n v e s tm e n t a n a ly s is

P ric in g /p ro fita b ilitya n a ly s is

R e lo c a t io na n a ly s is

C o n tra c t c o s ta n a ly s is

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W o rdp ro c e s s in g

G ra p h ic sw o rk s ta t io n s

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M a n a g e ria lw o rk s ta t io n s

E le c tro n icC a le n d a rs

O p e ra t io n a l L e v e l S y s te m s

O rd e r T ra c k in g

O rd e r p ro c e s s in g

M a c h in e c o n tro l

P la n t s c h e d u lin g

M a te ria l m o v e m e n tc o n tro l

S e c u rit ie st ra d in g

C a s hm a n a g e m e n t

P a y ro ll

A c c o u n ts p a y a b le

A c c o u n ts re c e iv a b le

C o m p e n s a t io n

T ra in in g & d e v e lo p m e n t

E m p lo y e e re c o rd k e e p in g

T Y P E S O F S Y S T E M S

E S S

M I S

D S S

K W S

O A S

T P S

S a le s a n dm a rk e t in g

M a n u fa c tu rin g F in a n c e A c c o u n t in g H u m a nR e s o u rc e s

Classification of ISby 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

Sales & Marketing Systems Systems that help the firm identify customers for the firm’s

products or services, develop products and services to meet customer’s needs, promote products and services, sell the products and services, and provide ongoing

customer support.

EXAMPLESSystem Description Organizational LevelOrder processing Enter, process, and track orders OperationalMarket analysis Identify customers and markets using Knowledge

data on demographics, markets,consumer behavior, and trends

Pricing analysis Determine prices for products Managementand services

Manufacturing and Production Systems

Systems that deal with the planning, development, and production of products and services and with controlling the flow of production.

ExamplesSystem Description Organizational LevelMachine control Control the actions of machines Operational

and equipmentComputer-aided design (CAD) Design new products using Knowledge

the computerProduction planning Decide when and how many Management

products should be producedFacilities location Decide where to locate new Strategic

production facilities

Finance and Accounting Systems

Systems that keep track of the firm’s financial assets and fund flows.

ExamplesSystem Description Organizational Level

Accounts receivable Track money owed the firm OperationalPortfolio analysis Design the firm's portfolio of investments KnowledgeBudgeting Prepare short-term budgets ManagementProfit planning Plan long-term profits Strategic

Human Resources Systems

Systems that maintain employee records; Track employee skills, job performance, and training; And support planning for employee compensation and career development.

ExamplesSystem Description Organizational Level

Training and development Track employae training, skills, Operationaland performance appraisals

Career pathing Design career paths for employees KnowledgeCompensation analysis Monitor the range and distribution Management

ofemployee wages, salaries, and bene6csHuman resources planning Plan the long-term labor force needs Strategic

of the organization

Expert System

An expert system is a computer program that represents and reasons with knowledge of some specialist subject with a view to solving problems or giving advice.

Possess knowledge

Specific domain

Solving problem or giving advice

Expert Systems Features Expertise

Capable of making expert level decisions

Symbolic reasoning

Knowledge represented symbolically Reasoning mechanism symbolic

Deep knowledge Knowledge base contains complex knowledge

Self-knowledge Able to examine own reasoning Explain why conclusion reached

Major Components of Expert Systems

User Interface

InferenceEngine

KnowledgeBase

Components of Expert SystemsThe Expert SystemThe Expert System

KnowledgeBase

User Workstation

ExpertAdvice

UserInterfacePrograms

UserInterfacePrograms

InferenceEngine

Program

InferenceEngine

Program

Expert System DevelopmentExpert System Development

Workstation

KnowledgeEngineering

KnowledgeAcquisition

Program

KnowledgeAcquisition

Program

Expert and/orKnowledge Engineer

Major Components of Expert Systems

Three major components1. Knowledge base

Facts Special heuristics to direct use of knowledge the software that represents the knowledge

2. Inference engine Brain Control structure Rule interpreter The reasoning mechanism that draws

conclusions (the interpreter or control structure)

3. User interface

•Language processor

•The hardware and software that provide the dialog between user and the computer

Benefits of Expert Systems

Increased outputs Increased productivity Decreased decision-making time Increased process and product quality Reduced downtime Capture of scarce expertise Flexibility Ease of complex equipment operation Elimination of expensive monitoring equipment Operation in hazardous environments Access to knowledge and help desks

Benefits of Expert Systems (contd.) Ability to work with incomplete, imprecise, uncertain data Provides training Enhanced problem solving and decision-making Rapid feedback Facilitate communications Reliable decision quality Ability to solve complex problems Ease of knowledge transfer to remote locations Provides intelligent capabilities to other information

systems

E.S in Business Applications Finance

Insurance evaluation, credit analysis, tax planning, financial planning and reporting, performance evaluation

Data processing Systems planning, equipment maintenance, vendor

evaluation, network management Marketing

Customer-relationship management, market analysis, product planning

Human resources HR planning, performance evaluation, scheduling,

pension management, legal advising Manufacturing

Production planning, quality management, product design, equipment maintenance and repair

Limitations

Knowledge not always readily available Difficult to extract expertise from humans

Approaches vary Natural cognitive limitations Vocabulary limited Wrong recommendations

Lack of end-user trust Knowledge subject to biases Systems may not be able to arrive at

conclusions