WHAT IS AN INFORMATION SYSTEM?

An Information System can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization. In addition to supporting decision making, coordination and control, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products.

Information systems contain information about significant people, places and things within the organization or in the environment surrounding it. By information we mean data that have been shaped into a form that is meaningful and useful to human beings. Data, in contrast, are streams of raw facts representing events occurring in organizations or the physical environment before they have been organized and arranged into a form that people can understand and use.

Three activities in an information system produce the information that organizations need to make decisions, control operations, analyze problems, and create new products or services. These activities are input, processing, and output.

Input captures or collects raw data from within the organization or from its external environment. Processing converts this raw input into a more meaningful form. Output transfers the processed information to the people who will use it or to the activities for which it will be used. Information systems also require feedback, which is output that is returned to appropriate members of the organization to help them evaluate or correct the input stage.

SYSTEM CONCEPTS

System concepts underlie the field of information systems. That’s why we need to discuss how generic system concepts apply to business firms and the components and activities of information systems. Understanding system concepts will help you understand many other concepts in the technology, applications, development, and management of information systems.

What Is a System?

A system can be defined as a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process. Such a system (sometimes called a dynamic system) has three basic interacting components or functions;

· Input involves capturing and assembling elements that enter the system to be processed. For examples, raw materials, energy, data, and human effort must be secured and organized for processing.

· Processing involves transformation processes that convert input into output. Examples are the manufacturing process, the human breathing process, or mathematical calculations.

· Output involves transferring elements that have been produced by a transformation process to their ultimate destination. For example, finished products, human services, and management information must be transmitted to their human users.

Feedback and Control

The system concept becomes even more useful by including two additional components; feedback and control. A system with feedback and control components is sometimes called a cybernetic system, that is, a self-monitoring, self regulating system.

· Feedback is data about the performance of a system. For example, data about sales performance is feedback to a sales manager.

· Control involves monitoring and evaluating feedback to determine whether a system is moving toward the achievement of its goal. The controls function then makes necessary adjustments to a system’s input and processing components to ensure that it produces proper output. For example, a sales manager exercises control when reassigning salesperson to new sales territories after evaluating feedback about their sales performance.

INFORMATION SYSTEMS AND BUSINESS

In the early days of computing – during the 1950s and much of the 1960s – managers generally did not need to know much about how information was processed in their organization. Over time, IS have come to play a larger role in the life of a business or enterprise. IS now play a strategic role in most businesses. They effect:

How managers decide

How senior managers plan

What products and services are produced ( and how)

INFORMATION SYSTEMS AND SOCIETY

Information has become a valuable asset of any organisation and the knowledge worker’s ability to assimilate information and turn it into knowledge is what makes businesses perform more effectively. It is the key to an organisation’s future success.

BUSINESS STRATEGY

Formulating a business strategy

We need to consider the following factors when looking at a strategy for a business:

Market performance

Business mission

Operational needs

Business environment

Social and human environments

Customers

Suppliers

Business Value Chain

Value activities can be divided into two broad types; primary activities and support activities. Primary activities are the activities involved in the physical creation of the product and its sale and transfer to the buyer as well as after-sales service. In any company, primary activities can be categorized into the five generic areas:

Inbound logistics

Operations

Outbound logistics

Marketing and sales

Service

Support activities support the primary activities.

Procurement

Technological development

Human resource management

Company's infrastructure

Within each category of primary and support activities, there are three activity types that play a different role in competitive advantage.

Direct

Indirect

Quality Assurance

The Role of Information Systems in Competitive strategies

The external business environment – the forces that are affecting the industry in which the business operates, the economics of the industry, its structure and competitive basis and within that the pressures facing the business;

The external IS/IT environment – what technologies are being developed, and how are they being used by others;

The internal business environment – the needs of the business, based on what the business does, how it does it and how it is organised and managed;

The internal IS/IT environment – existing systems and technology resources. Even information itself, should be regarded as a resource with strategic significance.

TYPES OF INFORMATION SYSTEM

We can classify IS in many different ways. The following diagram show some of the main types that are found in businesses. Not all types will be present in all business.

Transaction Processing Systems (TPS)

A Transaction Processing Systems (TPS) is a computerized system that performs and records the daily routine transactions necessary to be conducted of the business. Examples include: sales order entry, hotel reservation systems, client information systems, payroll, employee record keeping and shipping.

Knowledge work and Office Automation Systems

Knowledge Work Systems (KWS) support the information and knowledge workers in the organization, ensuring that new knowledge and expertise are properly integrated into the business and performing the coordinating activities of the typical office.

Today’s knowledge systems support clerical, professional, technical and managerial workers. Often the same desktop device (a PC) supporting an office function (for example, correspondence) also functions as a professional workstation, providing analytical models for the engineer or graphics for the designer.

Control Systems

The majority of the discussion so far has concentrated on systems that process information alone it should not be forgotten that many organizations use computer-based systems to perform physical control functions within the business as well.

Such a system will often be directly connected to real-world signals, will process those signals according to some predetermined algorithm, and then drive some electromechanical device to perform some physical function.

Examples of control systems include automated manufacturing systems, Supervisory Control and Data Acquisition System (SCADA) for generation and distribution of utilities such as gas, electricity and water; telecommunication systems (as found in modern telephone exchanges); avionics systems (for flight navigation and automatic pilot) and air traffic control systems.

Management Information Systems (MIS)

At the management level, Management Information System (MIS) provide managers with reports and online access to the organization’s current performance and historical records. MIS primarily serve the functions of planning, controlling, and decision making at the management level. Generally, they condense information obtained from operational level systems and present it to management in a form of routine summary and problem reports. An example is an accounts receivable sub-system that totals the outstanding balances overdue each month.

Decision Support Systems (DSS)

Decision Support Systems (DSS) are devoted to supporting management decisions that are semi-structured, unique or rapidly changing. They are not easily specified far in advance. They differ from MIS in several ways. DSS have more advanced analytical capabilities that permit the user to employ several different models to analyze information.These systems draw on internal information from TPS and MIS, and they often bring in information from external sources (for example, current prices of financial futures supplied by another company).

Executive Support Systems (ESS)

Executive Support Systems (ESS) are a relatively new category of systems that support decision making by senior management. They serve the strategic level of the organization.

ESS address unstructured decisions and involve a generalized computing and communications environment rather than any fixed application or specific capability. Although they have limited analytical capabilities, ESS employ the most advanced graphics and can deliver graphs and data from many sources immediately to a senior executive’s office or a boardroom.

Enterprise Resource Planning (ERP)

Enterprise Resource Planning (ERP) is a new type of application that includes powerful facilities to manage the enterprise as a whole. ERP helps an organization to manage the important parts of its business, including product planning, parts purchasing, maintaining inventories, interacting with suppliers, providing customer service, and tracking orders.

ERP can also include modules for the finance and human resources aspects of a business. Typically, and ERP system uses, or is integrated with, a relational database system. The deployment of an ERP system can involve considerable business process analysis, employee retraining, and new work procedures.

THE TECHNOLOGIES AND THEIR APPLICATION

This general heading of IS can be broken down into six generic types. These are listed below:

Data - Data technology is based on the collection, manipulation and presentation of information to enable management to make better decisions and accurately record the facts. E.g. EDI, EPOS

Text - Textual information is usually input into the computer by one of two methods. It can be typed directly into the computer using one of the many word processing packages or it can be scanned in. E.g. word processing, desktop publishing.

Image - The technology for scanning documents is most commonly seen in the fax machine. This is not complex – a scanner detects the presence of shaded dots on the page and then converts this information into easily transmitted data.

Voice - Person-to-person contact, when not in the same location, has been conducted for the longest period of time using the telephone. The use of voice contact, next to actually seeing the person, is the most popular form of communication. E.g. Voice mail.

Vision - Merging technologies will affect all workers to a degree but in particular office workers. All around us we can see the changes taking place in our offices. In most organisations PCs are being bought at an ever increasing rate, firstly to satisfy a particular individual’s need for say word processing, spreadsheets and databases. Then they become linked into corporate computers to become intelligent workstations. Voice connections are being added, as are image processing and the ability to reproduce handwritten notes. People have car phones, portable phones and now laptop and notebook computers to carry around.

Communications - Many of the technologies described above become much more usable, with a wider range of possible applications when combined with the additional technology of computer communications or networks. One definition of telecommunications is simply the electronic linking of geographically separated devices. A telecommunications system is defined as a set of compatible telecommunications devices that link geographically separated devices. The purpose of a telecommunications system is to develop a network of interconnected components. Such systems can transmit text, graphic images, voice or video information. E.g. Local Area Network (LAN), Wide Area Network (WAN),